Understanding Allocation Models in Google Ads: How to Choose/Convert? Google Ads 2024

allocation models in Google Ads
Allocation models in Google Ads play a pivotal role in illuminating the intricate web of user interactions and assigning credit to various touchpoints in the customer journey.
In this blog, Bluefocus will delve into the complexities of allocation models, their impact on campaign optimization, and practical tips for advertisers to make informed decisions.

So, what are allocation models in Google Ads?

Allocation models in Google Ads are a set of rules or methods used to assign credit to different touchpoints in the user journey leading to conversions (such as purchases or sign-ups).
Because the path to conversion for customers may involve multiple interactions with your ads across various channels and devices, allocation models help advertisers understand which ad interactions have the most significant impact on driving conversions. Google Ads employs six allocation methods:
  • Last click attribution
  • First click attribution
  • Linear attribution
  • Position-based attribution
  • Time decay attribution
  • Data-driven attribution
allocation models in Google Ads
allocation models in Google Ads
Google has discontinued the use of 4 allocation models in advertising and analytics: First click, Linear, Time Decay, and Position-based, so users can no longer utilize these allocation models. However, Last click attribution and Data-driven allocation models are still available.

Why are allocation models in Google Ads important?

Advertisers often assess the effectiveness of online advertising by solely focusing on the “last click” model, which assigns full credit for a conversion to the last-clicked ad and corresponding keyword, disregarding any other ad interactions that customers may have engaged with during their journey.
Allocation models in Google Ads provide greater flexibility in determining the assigned contribution value for each ad interaction leading to your conversions. This enables you to:

Engage with customers in the early stages of the buying journey.

By using all allocation models in Google Ads, you gain the ability to reach potential customers at earlier stages in the purchase cycle. It allows you to identify and capitalize on opportunities to influence their decision-making process before they reach the final conversion stage.
This means you can adjust your advertising strategy to attract users while they are still in the research or consideration phase, nurturing them towards conversion effectively.
allocation models in Google Ads
allocation models in Google Ads

It aligns with your needs and business characteristics

  • Choosing the right allocation models in Google Ads that fits specific search behaviors and consumer journey models related to your business can significantly enhance the effectiveness of your advertising.
  • If your customers tend to conduct extensive research before making a purchase, emphasizing early touchpoints, such as First Click or Linear allocation, may be beneficial.
  • On the other hand, if your target audience typically makes quick purchase decisions after interacting with your ads, Last Click attribution or Time Decay allocation models may be more suitable.

Improves your bidding strategy

  • Google Ads allocation models allow you to fine-tune your bidding strategy by providing detailed insights into the performance of ads across different touchpoints. With a better understanding of which interactions, ads, and keywords contribute most effectively to conversions.
  • You can allocate your budget more efficiently by focusing bids on channels, keywords, or ad placements that yield the highest return on investment (ROI). Optimizing bids based on this data allows you to maximize the impact of your advertising budget and improve the overall profitability of your campaigns.

Types of allocation models in Google Ads

Let’s examine the 6 allocation models available in Google Ads to determine which model best suits your needs, diving into the advantages and disadvantages of each model.

Last Click attribution model

Definition

  • Also known as last-touch allocation models in Google Ads, this method assigns all conversions to the last touchpoint before the conversion event, simply put, the most recent ad interaction and its corresponding keyword will receive sole credit for the conversion, disregarding any previous interactions.
  • And this is why brand campaigns often generate a high number of conversions compared to others. Because most users tend to search for the brand before making a conversion.
  • The Last Click allocation model does not take into account the complexity of modern multi-touchpoint advertising strategies, where users are exposed to multiple different messages at different stages in their conversion journey.
  • For example, if you’re running 5 separate Google Ads campaigns spanning across search, shopping, display, in case the user converts after interacting with a remarketing ad displaying an image, that specific campaign will receive full credit for the conversion, regardless of the contributions of other campaigns in the overall conversion path.
  • This model does not consider the initial interaction of users with your brand originating from search focusing on generic product or service searches or searches for specific brand, none of these factors are considered, and the last touchpoint will receive the entire allocation for the conversion.
allocation models in Google Ads
allocation models in Google Ads

When to use Last Click attribution model

  • Google Ads utilizes the Last Click attribution model for conversion actions, and if you haven’t modified this setting in your advertising account, you may be using the Last Click attribution model.
  • Using the Last Click attribution model may be more suitable if your product or service is not related to long-term purchase decision-making processes. For fast-moving consumer brands, where purchase decisions are made relatively quickly, Last Click attribution may be the appropriate choice.

Advantages and disadvantages

  • Advantages: simple, easy to set up, this model provides basic insights into channel performance.
  • Disadvantages: It disregards all touchpoints except the last touchpoint. It can lead to a lack of comprehensive understanding of the customer journey as well as the contribution of other channels and campaigns to conversions.
allocation models in Google Ads
allocation models in Google Ads

First Click allocation model

Definition

  • The First Click allocation models in Google Ads allocates all conversions to a single interaction, in this case, it only credits the initial ad interaction and disregards any subsequent interactions in the user’s journey.
  • This means that even if a user interacts with 4 different ads and keywords after the initial interaction, only the first interaction is credited for the conversion. Both Last Click and First Click allocation models allocate conversion credit at a single touchpoint without considering any other touchpoints.
  • However, in the case of the 4 remaining allocation models mentioned below, conversion credit is distributed across multiple touchpoints as users progress through their conversion journey.
allocation models in Google Ads
allocation models in Google Ads

When to use the First Click allocation model

  • If your business prioritizes building brand awareness, you may opt for the First Click attribution model, which allocates all initial ad interactions to conversions.
  • Using this model, you can recognize ad clicks as the starting point in the user’s journey leading to conversion. Thus, you can identify which keywords drive users to interact with your ads and which keywords support those interactions.
  • This attribution model can be beneficial if you are in the early stages of deploying campaigns on Google Ads and need to enhance brand awareness for your business.
  • However, it is essential to note that depending on the nature of your product or service, users may interact with multiple keywords and ads before converting. Therefore, the conversion data provided by this model may not always accurately reflect user behavior.

Advantages and disadvantages

  • Advantages: Provides detailed information about the customer’s initial interaction with the brand, particularly valuable for businesses focusing on brand awareness and identifying effective campaigns to introduce the brand to users.
  • Disadvantages: Excludes all touchpoints except the first touchpoint, potentially limiting insights into the customer journey similar to Last Click attribution.

Linear allocation model

Definition

This allocation models in Google Ads evenly credits conversions across various touchpoints, regardless of how many steps before the conversion, each touchpoint is allocated an equal share of credit.
For example, if a user interacts with five touchpoints before converting, each touchpoint will receive an equal credit share of 20% for the conversion.
allocation models in Google Ads
allocation models in Google Ads

When to use the Linear attribution model

Use the Linear allocation models in Google Ads if all ad interactions with your brand are equally significant in driving conversions. Consider business models where each ad interaction gradually leads customers to a conversion or even multiple conversions.

Advantages and disadvantages

  • Advantages: evenly distributes credit across all touchpoints in the customer journey, providing a more comprehensive understanding of performance.
  • Disadvantages: Although slightly deeper than previous models and more balanced in credit allocation, the Linear allocation models in google ads may not accurately describe the impact of each touchpoint. For example, initial touchpoints may have lower intent compared to mid-funnel or final touchpoints.

Time-Decay attribution model

Definition

The Time-Decay allocation models in Google Ads assigns the highest credit to the touchpoint closest in time to the conversion, while those further away in time receive less credit for the conversion. This can lead to a direct impact on the ROAS target in Google Ads.

A notable feature of this model is the use of a 7-day decay period to distribute credit, implying that an interaction occurring on the 8th day before the conversion receives only half the credit contribution compared to an ad interaction occurring closer to the conversion.

allocation models in Google Ads
allocation models in Google Ads

When to use the Time-Decay allocation model

You can apply this allocation models in Google Ads when you have ongoing promotional campaigns in your advertising account. It can be used in time-sensitive campaigns to better understand customer purchasing behavior during the promotion period.

Advantages and disadvantages

  • Advantages: Allocates significant credit to touchpoints closer to the conversion, providing deeper insights compared to the Last-Click attribution model and offering more accurate performance understanding by recognizing the value of previous touchpoints.
  • Disadvantages: This model may entirely overlook initial touchpoints or inaccurately allocate the impact of previous touchpoints, resulting in an incomplete performance description.

Position-Based attribution model

The Position-Based allocation models in Google Ads primarily allocates contribution value to both the first and last touchpoints while still acknowledging the contribution of all other touchpoints.

By using this model, you can identify which campaigns or keywords initially attracted attention and which campaigns or keywords ultimately facilitated the conversion.

allocation models in Google Ads
allocation models in Google Ads

When to use the Position-Based allocation model

This model is effective for businesses where both the initial and final interactions significantly impact the conversion of buyers. It is most suitable for brands that prioritize the importance of both the first and last clicks compared to intermediate interactions during the conversion process.

Advantages and Disadvantages

  • Advantages: Recognizes the starting and ending touchpoints of the customer journey, acknowledging their importance in influencing conversions. This can enhance the conversion rate in Google Ads.
  • Disadvantages: This model overlooks intermediate touchpoints in the customer journey. If users interact with 10 of your keywords before making a purchase, the model will not allocate any credit to 8 of the keywords in the middle.

The Data-Driven allocation models in Google Ads

Definition

The Data-Driven allocation models in Google Ads assigns value to interactions with ads to generate conversions based on previous conversion action data in the account. This allocation model allocates credit based on a more straightforward capital allocation.
The data-driven approach uses machine learning algorithms to calculate the assigned credit for each ad interaction based on the conversion history in the account.

When to use the Data-Driven allocationmodel

If your account consistently generates ad clicks and conversion actions. While most conversion actions qualify for the data-driven model regardless of the number of conversions, Google Ads requires some conversion actions to meet a minimum threshold of at least 300 and a minimum of 3000 conversions within 30 days to be eligible.

Advantages and disadvantages:

  • Advantages: Utilizing machine learning technology to allocate credit based on the impact of interactions, leading to a more accurate depiction of customer journeys.
  • Disadvantages: Heavy reliance on crucial data and accurate conversion tracking, hindering businesses with limited conversion or accounts with tracking issues when implementing this allocation models in google ads

How to choose an allocation models in Google Ads

Prepare your Google Ads account to switch allocation models in google ads. If you don’t have one yet, you can consider renting a Google Ads account through the Google Ads agency service at bluefocus.
Navigate to the Tools and Settings section, then click on Attribution under Measurement.
allocation models in Google Ads
allocation models in Google Ads
Utilize the model comparison feature located in the left-hand menu to compare how conversion data in your account is allocated across different allocation models in Google Ads.
allocation models in Google Ads
allocation models in Google Ads
If you’re ready to switch your allocation models in google ads, you can do so at the conversion level. Navigate to Tools and Settings, then select Conversions. Click on the conversion event you want to change the allocation models for in Google Ads, then click Edit, and Settings.
allocation models in Google Ads
allocation models in Google Ads
Conclusion
The allocation models in Google Ads to measure success plays a crucial role. It serves as the foundation for all decisions in your advertising account, whether it’s tweaking keywords, increasing campaign budgets, or pausing spend on certain campaigns.
Take the time to carefully analyze your business requirements before applying any attribution model in your account, as these decisions cannot be based on inaccurate data across accounts.
Stay tuned to bluefocus’s upcoming blogs for more valuable insights.

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