Commentary

Don't Lose Faith In The Click

The Internet has long been the place where advertising models go to die, but one measurable -- the click -- is still very much alive and kicking. As Mark Twain once said, "The reports of my death are greatly exaggerated." What we're experiencing now is, rather, an evolution of sorts - online advertising is being pulled further and further away from demographics and readership rates and closer to intent-based targeting.

Advertisers want just one result from their hard-earned ad spends: conversions. While the cost-per-action model has hovered on the edge of viability for years now, Google and the PPC movement have revolutionized the targeting of Internet surfers by serving ads based on intent. Why would an advertiser for a major car company care if his or her ads were showing to males in the 18-35 demographic, when they can be shown to people who have actually gone out of their way to search for "2009 SUV"? It is for this reason that advertisers pay more for search engine ads than publisher ads.

From a publisher's point of view, it's this level of intent-based targeting that has been missing from website advertising networks. Contextual ads were a good start, and have been more or less successful, but the ads are still based on the entirety of a site's content rather than what individual visitors really want and are actively searching for. The two statistics that are any publisher's lifeblood - clickthrough rate and click value - both drastically improve with better targeting, as readers see more relevance in the ads served and advertisers see better conversion results, making them willing to pay more.

The banner ad is essentially obsolete for one very good reason: advertisers saw terrible returns on investment as online readers became numb to the irrelevant, garish splashes of color and Photoshop graphics inserted clunkily into their favorite sites. Except for the richest broad-market brands (Coke, Pepsi, McDonalds, etc.), unmeasurable "branding" in the infinitely measurable world of online advertising is a proposal that will get ad agencies and marketing directors fired, and combined with the historically low clickthrough rates seen by banner ads, a recipe for disaster was concocted.

Now, we're seeing contextual ads following a similar path. Advertisers will still buy them, but without the element of user intent, the conversion rates are significantly lower than search engine ads, with the amount advertisers are willing to pay per click lowered to match. This is why in order to continue earning from a website, publishers have to be able to target their readers' intent as effectively as search engines can. Whether that is targeting the search terms of individuals who come to a site via search engine, or another method, it is the next necessary evolution of advertising on Web sites.

So yes, the click is still valuable, and publishers shouldn't lose faith in it. However, the old tried-and-true methods of broad contextual advertising are no longer quite so true; target individuals, discern and serve ads to intent, give people exactly what they're looking for in both an ad and an article, and advertisers will happily send you money

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4 comments about "Don't Lose Faith In The Click".
  1. Scott Brinker from ion interactive, inc. , June 30, 2009 at 7:38 a.m.

    Great article, Daniel!

    I agree that better targeted ads increase clicks, and matching ads as closely as possible to individual users intent is a great goal.

    However, I also think that intent is a fuzzy thing to measure. (Any doubt? Turn on the Sunday morning political talk shows.) Perfect intent detection is probably not achievable, but you want to asymptotically approach it as close as you can.

    In the pursuit of that goal, I'd just suggest that advertisers spend an equal or greater amount of time detecting intent AFTER the click on the ad. This is the realm of post-click marketing, where a few behavioral choices in a well-constructed landing path can reveal tremendous segmentation data by directly engaging respondents in a dialogue about their intent.

    Estimated intent in targeted advertising combined with behavioral intent dialogues in post-click experiences are an immensely powerful model.

    In the end, it's that combination which maximizes the ultimate goal of conversions.

  2. Deborah Richman from Tiny House Joy , June 30, 2009 at 3:28 p.m.

    We agree that intent-based targeting, or rather interest-based targeting, has been missing from publishers’ website ad networks. However, it is way too early to determine that banner ads or contextual ads are obsolete!

    If a visitor has been joined to interests shared by other SUV-interested visitors, then the ads they see will vary on a given content page based on these shared interests. Segmentation could be very refined and represent dynamic changes in the users’ interests and intents, thus serving the publishers and advertisers as well.

    Collarity provides this type of targeting for publishers, so we appreciate the support of consumption metrics – clicks matter along with increased CPMs here, all driving more ad revenues.

  3. Daniel Ruby from Localytics , June 30, 2009 at 5:05 p.m.

    Scott,

    Thanks for the compliment. You're absolutely right that perfect intent detection is likely not achievable, but between search-based advertising (AdWords on the search engine side, Chitika on the publisher's side) and re-targeting technologies, the industry is getting much closer, and it's getting there fairly rapidly.

  4. Senthil Kumar from Secundus , June 30, 2009 at 10:31 p.m.

    Fantastic Article Daniel. Actually I am too much frustrated after getting no clicks for numerous page views. I got convinced and transformed into an esteemed publisher... Now I am having a faith in the click. Thanks for sharing your views!!!