Ever since digital advertising was in its infancy, the click through rate or CTR has been a critical performance criteria.
However, in terms of online advertising at least, the first doubts about the correlation between a click and purchase intent were raised back on 2008 by comScore in their ‘How Online Advertising Works: Whither the Click?’ study. ComScore found that a small subset of browsers, 10% in total, were responsible for 80% of clicks on online advertising. Worse still, for premium and luxury advertisers in particular, those ‘clickers’ tended to be younger and on lower incomes.
Now, a new report from comScore, in association with ‘intent targeting company’ Pretarget, tries to hammer the final nail into the coffin of the concept that CTR is in any way an accurate measure of the effectiveness of an online ad.
The study, which analysed more than 263m ad impressions over 9 months across 18 advertisers in a range of industries, measured the correlation between various ad related metrics and conversion, as defined by purchases and requests for information.
Of the 4 measures analysed – Clicks, Gross Impressions, Viewable Impressions and Hover/Interaction rate – the metric which showed the weakest correlation with conversion, and by some considerable margin, was clicks (0.01 correlation). This was followed by gross impressions (impression served, 0.17), Viewable Impressions (ads actually rendered in the viewer’s browser, above the fold – 0.35) and Hover/Interaction Rate (viewer mouse hovering over the ad, 0.49).
So if this latest study is taken a face value, the fact that an ad is served (with no proof it’s been seen) to the viewer is a better predictor of conversion than a click on that ad. Someone who hovers over an ad with their cursor is 49 times more likely to convert than someone who clicks on that ad. Surely, click thru rate has been entirely discredited and agencies and their clients need to look at other forms of ad interaction to measure ad effectiveness?
Well, not quite, because display ad firm Criteo has just released a study that, if not wholly resurrecting CTR as a primary measurement criteria for all online ads, certainly casts an element of doubt into the debate.
Their study looked at users exposed to Criteo retargeted ads – a sample of 147m users. This sample was split into 2 – clickers (those who had clicked on the Criteo ad) and non-clickers (those that hadn’t). They then looked at sales that clickers and non-clickers had completed online during Q1 2012.
The study found that clickers tended to be more valuable than non-clickers – generating 1.13 online sales per 100 browsers exposed to the ad versus 0.39 for non-clickers.
Clearly, there are lots of holes that can be picked in this methodology. Criteo only looked at those people who had clicked (or hadn’t clicked) on their ads, not those who click (or not) on online ads in general. The sample of clickers, given their average CTR of 0.7%, would have been much smaller than their sample of non-clickers, although still no doubt statistically relevant. And browsers weren’t tracked to their purchase of the brands Criteo was serving the ads for, just to online purchases in general. Despite these shortcomings, it does at least suggest some correlation between people who click ads and people who have a higher propensity to purchase online.
Criteo produced 2 other pieces of evidence to back up their argument. Firstly, clickers formed a higher percentage of their advertisers’ sites regular buyers than they did occasional buyers or non-buyers. Almost half their regular site buyers were ad clickers – given that only a fraction of people that viewed the ads would have been clickers, again this suggests a strong correlation between intention to purchase online and ad clicking.
Finally, Criteo’s study found a direct correlation between the volume of clicks and the volume of sales – those that clicked heavily also bought heavily.
So where does this leave the CTR debate? Well, firstly no-one is challenging the effectiveness of online advertising per se. And we’ve argued for a while that CTR tells far from the whole story – ads are influencing those that see them and much of their reaction to those ads is clearly happening post click. We don’t judge offline ads purely on direct response so why should we judge online ads in the same manner?
The debate now is clearly about whether CTR has any relevance at all in determining the effectiveness of an online ad – do clicks indicate a genuine intent to purchase or are most accidental or spurious, undetaken by those who have no intention or means to purchase.
Criteo’s study suggests that for retargeted ads, at least, it’s too early to discard it as a measure as there does seem to be a correlation between clickers and purchasers. We mustn’t forget that retargeted ads are highly targeted and relevant to the browser – being served post a visit to the advertiser’s site. And the audience is self-selected too. If there is to be a correlation between clicks and purchase, these are the ads to deliver it.
However, for other forms of online advertising, CTR would seem to be measuring the tip of the iceberg at best, and sending misleading signals at worst. In these cases, CTR needs to be complemented by other forms of measurement such as ad hover/dwell rate and/or ad dwell time to give advertisers a more accurate measurement of the effectiveness of their campaigns.