Here are four reasons why marketers should still look to CTR first when evaluating a campaign's success.
The value of the click, or more specifically the last ad clicked, has come under attack yet again, this time in a Tacoda-sponsored study. For years, marketers have known that the click is not the only value of marketing online. Only counting the click from the most recent ad a consumer sees neglects to attribute value to previous ad views, search activity and any other online activity that drove the user to that click.
This newest study finds that 50 percent of clicks come from just 6 percent of users. If I'm a marketer, the idea of cost-per-click (CPC) all of a sudden sounds suspect! But don't apply a verdict to this case just yet. Following are four vital arguments to consider before abandoning the click and the value it brings to your campaigns:
The dancing baby and the long tail
Let's eliminate the paranoia created by the "50 percent driven by 6 percent" issue. According to Google in a recent iMedia article, 76 percent of online page views are from long-tail sites. Long-tail sites get most advertising from networks and command lower CPMs. The advertisers on ad networks that end up buying these lower-CPM sites are often made up of "click here for a free iPod," "You are the 8,764,789th visitor to this site -- you've won!" and the famous "punch the monkey" ads.
Now, if a small number of users are clicking on the majority of ads, it's obvious that they're clicking where 76 percent of internet traffic is and all the junky ads are, and most of us don't care if the junky ads are "overclicked" anyway.
Free impressions are too good to refuse
CPC provides a large number of impressions at no charge. Going back to the very beginning, there is much more to evaluating the success of an online campaign than merely last ad clicked. What if everything but the last ad clicked was free? I'm failing to see the downside of CPC here!
Most marketers in any medium do not apply Ph.D-level analytics to their marketing. While this is a shame, it's also a reality. Most direct mail advertisers don't apply regression analysis or A/B split testing to their campaigns; they look at response rate. Many outdoor advertisers rely on a few individual customers per month to tell them they saw their billboard; or, more likely, the CEO commented that he saw it on his way into work (since the agency found out which route the CEO drives) and "liked the campaign." Again, it's just a reality. You'll remember the initial excitement about how many hits a website got. We were fortunate enough to move our clients away from that, but clicks aren't going anywhere any time soon.
Many marketers don't have just one site
Many advertisers can't get conversions without clicks to drive users to their sites in the first place. A large wireless carrier may have to present multiple display impressions and search views before a user types the advertiser's address directly into the toolbar and makes a purchase. The key is that the user did type the address. But we're not all that lucky.
Think about a Southern California auto dealer association (multiple same-brand dealers banding together to promote that brand in the market). Even if the dealer has a regional website, the consumer is unlikely to remember it or bookmark it. In this case, the last ad clicked is valuable because that's possibly the last time you'll get the consumer to your site. It's like working on your short game in golf without being able to drive off the tee. Yes, the short game is most important (as are online conversions over clicks) but if you can't get near the green in the first place, the short game will be irrelevant.
Many marketers don't sell anything online at all
We can't all be Amazon. Industries like automotive, real estate, fast food, soda/beer, etc., all do not sell products online. eMarketer shows below how online marketing drives significantly more sales offline than online.
These advertisers generally look to onsite post-click success metrics to determine the deeper value of a campaign that clicks alone won't show. While these marketers certainly want deeper engagement on their sites, most marketers don't truly know that a real estate lead or signing up to learn more about a political candidate truly nets them a sale or a vote. A great example comes from traditional direct marketing, where our own research found that more than 83 percent of recipients of automotive direct mail who actually bought a vehicle didn't even bother to claim the $50 gift card they were given in the mailer! Of course on the other side, 93 percent of those who redeemed the $50 gift card didn't buy at all. So, which is more valuable: getting a good "response rate" (redeeming the gift card) or truly selling your product?
Going forward
You know your business better than anyone. For the majority of us in imperfect situations, we need to deal with the fact that a "Minority Report" world is not yet here. If, or until such a scenario becomes a reality, the experience we have offline combined with what we constantly learn online will continue to improve our success and put us one step ahead of competitors.
Jay Friedman is president and co-founder of Goodway 2.0.