Clicks Are Just A Part Of The Picture

by Jack Loechner, Nov 25, 2010, 8:15 AM

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One of online marketers' simplest metrics to keep track of, the clickthrough rate, has been in decline for years, notes eMarketer. Based on longitudinal data from MediaMind, however, that decline appears to have stopped. The company's analysis of data from July 2006 through July 2010 shows that annual average click rates have plateaued, at 0.09%.

According to "Standard Banners-Non-Standard Results," it was the success of online display ads that caused the drop in clicks to begin with. As users saw more and more ads across the internet, many continued clicking, but not fast enough to keep up with the expanding inventory. Clickthrough rates fell steadily until reaching an equilibrium.

An analysis of CTR of Standard Banners indicates that average CTR declined from 0.15% in 2006 to 0.09% in 2010. Yet, in 2009 and 2010 this decline seems to have stopped. Both in 2009 and the first eight months of 2010, Average CTR has remained around 0.09%. This indicates that online advertising performance has reached equilibrium.

Standard Banner Click Through Rate (Worldwide, 2007-2010)
Year	Global CTR	Annual Average CTR
2007	0.10%	0.12
2008	0.12	0.11
2009	0.09	0.09
2010	0.10	0.09
Source: MediaMind, November 2010

Gal Trifon, CEO and co-founder at MediaMind, said "... the leveling of CTR shows that online advertising has reached a level of maturity... advertisers have become more sophisticated in luring users' interest..."

The study also provides further evidence to back up brand marketers who want to measure more than just clicks to determine the effects of their campaigns. Just 20.4% of conversions came after clicking on a banner ad. Instead, the vast majority happened among web users who had seen the ad but not clicked on it, and who converted at a later date.

Standard Banner Ad Conversions Worldwide (% of Total Conversions)
When Conversion	% of Conversions
Post-click conversion	20.4%
Post-impression conversion	79.6%
Source: MediaMind, November 2010

Evidence shows that the success of online advertising has paradoxically been the prime cause for the decline in CTR performance, says MediaMind. As more budgets were poured into display, users were exposed to more and more ads. However, the number of ads that a user clicked on did not catch up with the number of ads that a user was exposed to, thus reducing the overall CTR.

MediaMind illustrates this phenomenon this way: Imagine that you are exposed to one thousand ads each year, and that you click on five of them. Your CTR is 0.5%. Imagine now that you are exposed to five thousand ads; you are probably not going to keep clicking at the same vigor, so instead of 25 clicks, you only click on 20 ads. Therefore your CTR is now only 0.4%. Thus, as users are exposed to more ads, their CTR drops.

Included in the MediaMind paper is research by comScore that has shown that two-thirds of Internet users do not click on any display ads over the course of a month, and that only 16% of Internet users account for 80% of all clicks. comScore confirmed that there is a latency effect and branding effect to online advertising, in which users arrive at the advertiser's website even without clicking.

In the research, which included 139 display campaigns from seven verticals, comScore has shown substantial effects on traffic, sales and branding despite a lack of clicks.

According to comScore:

• The display campaigns yielded a 46% lift in advertiser websites visits, over a four week period
• Exposed users are 38% more likely to conduct an advertiser related branded keyword search over a four week period, and are 27% more likely to make a purchase online
• E=Exposed users are 17% more likely to make a purchase at the advertiser's retail store

MediaMind has found similar results to those of comScore. An analysis of more than 100 million conversions from thousands of campaigns worldwide confirms that only about 20% of conversions are the result of a click, while the vast majority is the result of viewing the banner without clicking.

These results, together with comScore's research, show that clicks are only a partial measure of online advertising effectiveness. About 80% of the traffic of users that were exposed to the ads is not accounted for when measuring only clicks. Placing conversion tags on the site is a smart move for better measurement of an online campaign. 

The eMarketer summarization may be found here, and the PDF file of Standard Banners-NonStandard results from MediaMind here.

 

 

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