Tuesday, August 21, 2007

Click-through rates: What's the obsession?

According to Wickipedia, click-through rates are defined as "a way of measuring the success of an online advertising campaign. A CTR is obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%."

Yea, I know. It sounds like a mouthful. Yet for years, marketers have been obsessed with click-through rates and the ROI percentage they receive from them. Marketing experts and companies alike love click-through rates because they believe it to be a great way to measure how many people are checking out the product or service they offer. While it's useful for search advertising, it's not for display ads on websites.

Dave Morgan, who writes a column for an email newsletter, OnlineSPIN, discussed this obsession in his recent column. He works for a company called Tacoda, who did some research on their behavioral and click data to see how many people clicked on ads. The results? A bit surprising.

They found that 99% of Web users don't even click on ads on a monthly basis! Furthermore, the 1% that do click only do it about once a month. But even more surprising is the fact that many of these "clickers" are females from the mid-west.

So where does that leave someone who wants to invest their online marketing dollars wisely and isn"t targeting mid-western women? According to Morgan, you should focus on "what audience your impressions are being delivered to, and what audiences are converting."

Basically, choose the website(s) to advertise on that best reach your target customers instead of merely focusing on how many clicks your ad is getting on a random site. You also want to focus on the quality of clicks you are getting vs. the quantity. How many of your website visitors from that ad actually turn into long-term customers?

The best advice I can give you is to do your research. Just Google "Click-through" and you’ll find a wealth of information on how banner advertising and measuring its worth is changing and growing, and what you should do to keep up with new trends and insights.

Laura Schutz