Here’s a blog posting that I wrote back in early 2010.  Not much has changed in the three years since writing this.  Advertisers are still struggling with digital measurement.

Originally posted April 13, 2010

Overall Click Through Rates [CTR] are well below 1%, so low in fact that ComScore frequently has to report CTR’s to the hundredth of a percent!  Furthermore, the people that do click are the wrong people.  Clicks are meaningless.  And yet advertisers are projected to spend $26 Billion this year online [including display, search, video, and other categories of online advertising].

Since the internet became a serious advertising medium, marketers have clung to CTR as THE metric.  It was presented to them as the holy grail of performance metrics.  Compared with traditional advertising, click throughs were a major breakthrough.  Advertisers could get reports on impressions [how many people saw their ads] and get reports on what they viewed as “ads that worked” [clicks].  These numbers were easily measured and easily reported.  But since the very first banner was delivered, the CTR has only moved in one direction – down.  So there’s good news and bad news: the good news is that although Click Through Rates are still declining, they’re beginning to stabilize.  The bad news is that they’re stabilizing at about 0% – AT ABOUT NOBOBY!  NOBODY CLICKS!  And even worse, among the very, very few that do click, conversions (those people that follow a click with a purchase, registration or some type of measurable commitment towards the brand) have declined at even greater rate than clicks – because the wrong people are clicking in the first place.

Very early on in the history of internet advertising, those people that sell online advertising realized that they didn’t in fact have the holy grail; they saw the data, they knew that clicks were only moving in one direction and that didn’t look good for them. So they tried to steer their customers away from clicks and towards “the branding” ability of online advertising to try and get the major players to commit ad dollars to their medium.

Whether it was their efforts to talk about “the branding” ability or some other reason, many brand marketers have agreed and committed to a presence; clearly online is an important medium. They are spending significant monies there and, more importantly, adjusted their expectations about the return on investment metric.  They have come to realize that CTR is not the holy grail it was first presented to be.  The problem is they still get those CTR reports and haven’t embraced a new measure.

Well the root of this dilemma is that traditionally, the more expensive the medium the more advertisers invest in advertising evaluation. Television is an expensive medium and so advertisers are willing to test their ads before airing them; billboards are relatively inexpensive and so advertisers do not invest the money to evaluate them.  Their thinking is, why evaluate a billboard ad for more than it costs to create it?  Online advertising falls in this category: inexpensive to produce so why should I test it?  Advertisers used to be able to conduct a quick two cell test of their banners and whichever one garnered the most clicks was the one they would launch.  Well, when you change the conversation from “CTR” to “branding” that doesn’t work.  It also doesn’t help that people aren’t clicking so there’s nothing to measure.

So what’s an advertiser to do in late 2012?

Many advertisers already get it about click rates but still using the wrong metrics.  Many have graduated from CTR to uniques and page views.  The problem with uniques and page views is that they’re media-buying effectiveness measures of reach and frequency, not advertising effectiveness measures.

Advertising is about more than that first step.  If it wasn’t, then when TV was invented it would have immediately been followed by the “IGOTSARTTSR” (“Immediately Get Off The Sofa And Run To The Store Rate”).

The CTR (Click Through Rate) is as irrelevant a measure for big brands as the IGOTSARTTSR.  It’s not the way advertising works; just because someone sitting at home on their sofa watching TV doesn’t immediately jump off the sofa after seeing your commercial doesn’t mean it isn’t working.

Let us help:

• Evaluate the effectiveness of your digital advertising with metrics that go beyond CTR.
• Evaluate how well your digital advertising is working with your traditional efforts.