Marketers all know John Wanamaker’s famous quote, “Half my advertising is wasted, I just don’t know which half.” A century later that’s finally beginning to change. With the tremendous growth of digital marketing and the innate ability to measure every tactic, marketers are now armed with the information they need to review results and successfully optimize their digital marketing initiatives.
Unfortunately, too many times I see marketers placing a priority on metrics that can ultimately lead to the wrong decisions about what might in fact be a successful campaign.
One example that I’ve encountered is a reliance on click through rate (CTR) as the true measure of banner advertising campaign performance. This very basic calculation divides the number of clicks on an ad by the number of times that ad was shown, often referred to as impressions. CTR was one of the very first metrics used to assess banner advertising performance and still is used as the primary element in many digital advertising reports today. So what’s wrong with that? Isn’t that the whole point of running banner ads, to get in front of your target audience and entice them to click over to your website? The short answer is “No”.
The reason being that people don’t click on banner ads. You probably haven’t had many digital marketing professionals tell you that. Especially when they are telling you how their proprietary software uses sophisticated algorithms to target audiences based on real-time behavioral blah blah blah… Sorry, that’s where I usually tune out.
Sizmek, one of the world’s largest digital ad-serving companies, releases a benchmark report each year that uses data collected from billions of ad impressions to determine the average performance of different types of digital advertising. While performance varies depending on the industry, banner ads in the US overall received a 0.08% CTR in 2013 (down from 0.10% in 2012). That means that if your banner is shown 1,000 times and one of those impressions entices a user to click, your campaign is performing above average. Oh goodie!
If that isn’t reason enough to all but abandon this metric in the assessment of your banner advertising campaign, here’s more bad news for my digital marketing brethren. According to a study by ComScore, a leading internet analytics company, 85% of all clicks on banner ads are performed by 8% of internet users.
In case I haven’t made the point clear enough, allow me to repeat myself: people don’t click on banner ads. And you know what else? That’s okay. Why should they click on your ad? They’re busy. They’re reading an article or watching video content or playing a game. To expect them to stop what they’re doing in order to visit your site is a bit narcissistic, don’t you think? But that doesn’t mean banner advertising isn’t effective or doesn’t work. The problem is we’re using a direct response metric to measure an awareness building tactic.
Many digital advertising vendors promote the fact that they will optimize your banner advertising campaign based on CTR. That means that as they collect data on the campaign’s performance, they can shift targeting parameters based on what historically is most likely to achieve clicks. It might sound like a good strategy but if the vast majority of users in the target audience don’t click on ads, this could shift ad impressions away from coveted viewers as well as high quality web pages and sites. Quality websites often receive lower banner advertising click rates because the page content is so engaging. As marketers, we want our brand to appear on publisher sites that are revered by their users in order to leverage that brand equity. Optimizing a campaign based on CTR would likely stop ads from running on the homepage of the WSJ and shift ad impressions to the millions of unknown properties that provide ad exposure without the added brand equity.
A better way to evaluate banner advertising performance is the utilization of view-through metrics. When set up correctly, we have the ability to track users who saw an ad, did not click, and then later came to the advertiser’s website as a result of the exposure. Taken further, we can track specific actions performed on the website such as information request form submissions, product video views, or online sales. This is a better gauge of how effective banner ads were at reaching and impacting the target audience. Campaigns can be optimized based on a metric such as view-through site visit rate, total view-through site visits divided by impressions. By using this metric to optimize performance, banner ads will be more likely to appear on high profile pages and quality content sites, the positions most likely to lift brand awareness and preference. The result: less wasted advertising. Mr. Wanamaker would be proud.