Is Clickthrough Rate Still A Good Measure For Success?

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My good friend Jason Falls posted on LinkedIn last week, in response to recently released Facebook Ads engagement data: “More statistics emerging on Facebook advertising statistics. I still am baffled that marketers are so lathered up about them. POINT-ZERO-SEVEN percent CTRs?”

Though I was away on vacation (and if you were to ask my wife, disconnected from all things Web-related -- don’t rat me out), I took some time to think this one over. Jason is extremely well regarded in the social marketing space, and his opinion is one I value. I wanted to better understand his perspective, primarily because Facebook serves ~25% of the world’s display ad impressions month-over-month and because I’m personally very bullish on Facebook Ads.

My initial reaction to that same body of data was, “Who cares? CTR tells us nothing about the impact of those ads. It depends on program objectives.” Plus, just as I’ve observed in paid search, there’s a lot of “stupid money” flying around while people figure it out.

I decided to write Jason. 

To: Jason Falls

Subject: Facebook Ads

Can be hugely valuable. I managed a program last year that generated a 14% conversion rate. It's all about defining appropriate KPIs and managing multi-channel touches too. 

Saw your mention earlier about it. ;-)

It didn’t take him long to respond…

To: Ryan DeShazer

Subject: RE: Facebook Ads

Don’t doubt there are some instances. But when the CTRs are on average that low, I can’t fathom why a medium or small business would even try.

Touché. He was right. I think I’m right too, though.

There may not be much benefit afforded the lay SMB advertiser if time and money are both extremely tight. Facebook Ads can be a time-consuming endeavor, and if Facebook is one of only a handful of advertising channels selected, the clickthrough rate (and, more important, number of conversions) may not justify the effort.

But our exchange also reminded me of similar conversations I’ve had about all forms of digital advertising. If business objectives aren’t clearly understood at the onset, and then made tangible through identifying program key performance indicators (KPIs), then who’s to say whether the advertising is effective or not?

In the case of Facebook Ads, a 0.07% CTR could signal a hugely successful brand awareness program. It could be the result of poor audience targeting selections. It might be producing double-digit conversion rates after the click. It could be 0.07% CTR against a billion impressions in a week’s time (700,000 clicks)! That CTR statistic alone lacks context.

And generally speaking, CTR is no longer a viable measure of success across any medium.

I can recall my early days in SEM advertising, when the CTR was the first number I checked within the AdWords interface. It provided me with at-a-glance data about which ads connected best to user queries. As I painfully discovered, however, programs managed in this way would often deliver little more than high volumes of tire kickers, when the goals were really centered on conversion. Had my objectives been focused on traffic generation alone, then CTR might have been an appropriate measure.

One of my earliest lessons in best-practice PPC management came from my first SEM mentor, David Szetela. Circa 2004, he taught me to set AdWords ad rotations to “even” rather than “optimize.” We did this to better understand which ads delivered our most important visitors. The focus was on quality over quantity.

That advice is still sound today, across search, display, and even Facebook Ads. Can any advertiser meet its marketing objectives with a .07% CTR? Well, it depends.

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5 comments on "Is Clickthrough Rate Still A Good Measure For Success?".

1. Merri grace Mcleroy from Integrated Marketing Strategies LLC
   

   commented on: July 10, 2012 at 10:22 a.m.
   Great insight, Ryan. I agree with you both. Any measurement of any marketing campaign is dependent upon the campaign's objectives. Online, the beauty of the numbers is the ability to obtain the numbers. Where else, other than online, can we even measure a brand awareness objective? And, of course, KPIs must be identified before the campaign is launched in order to manage the metrics effectively.
2. Al Kao from AK Works
   

   commented on: July 10, 2012 at 10:43 a.m.
   Never trust an agency to talk about "social media". Why? Because it IS so new you have NO expertise. So everything you are doing is experimental, at best. You are experimenting with clients' money. You also don't have people on board who are experts. You new college grads who are "experts" in social media (as a hobby, not as a profession). You can't hire top talent, you can't home grow top talent and you can't do either within enough time to get clients to fully trust you. Trust me. I know. I used to work in an agency. I know the game. CTR is most definitely a valuable metric still used. And the inhouse teams DO use that metric. It's important. A paltry 0.07% CTR is terrible for any business. You say, well it's good for brand awareness. Brands like what? Actually sit down and use Facebook as a user, not as some arrogant know-it-all self-righteous digital marketer. You will see that the ads 1) suck 2) are uninteresting and 3) are mostly big names Why? Because of the ads that do show up. The Ads and Sponsored Stories. To the user, both are the same - ads. Who cares if its an ad or sponsored story. Then to top it all off, you have suggested friends and suggested pages to like. All of this equals POOR ADS! now you say "well, I also meant FB posts etc." Well, let me tell you about those - they suck too. Unless I'm promoting a coupon I can't get too much traction or attention from FB users. Why? BECAUSE MY COMPANY ISN'T TOP OF MIND FOR THEM WHEN THEY USE FACEBOOK! Seriously - I am so sick and tired of agency farts talking up social media. Just another excuse for agencies to swindle more money from clients. Look here - from the user's perspective, if I like a brand, there's only 2 reasons for it 1) I'm incentivized to like it and pay attention to it 2) I genuinely like the brand, but I'm not hanging on their every friggin post or ad to fulfill my life. Get over it. Social Media is an important channel, but not a game changer. And at the end of the day - social media requires not only my signing in, but my attention in order for the ads to work. A lot of bloody "ifs". Social Media ads are for the dogs. Oh - and here's something fun. Social Media ads are like content ads in SEM campaigns - good for when you need to burn through a budget and get traffic - not good for quality. No matter how much you insist Social Ads help with "brand awareness" ...by the way, I challenge you to prove that social media builds brand awareness. start with something totally unknown and test to see if it grows. account for specific influencers. make sure you have your controls. i know you can't prove it.
3. Joshua Dreller from Kenshoo
   

   commented on: July 10, 2012 at 11:46 a.m.
   Al--take your meds! ;) Glad to see some passion here but the issue really here is success measurement, not clicks or social media effectiveness. We have to get our act together as an industry around standardizing measurement--once we do, understanding the value of a clicks to a campaign, or social media to a campaign is easy peasy. In some cases, clicks won't mean anything, in other cases, they're absolutely invaluable...same with social media. Same with all online/digital media. There's a bigger puzzle here folks...
4. Rob Garner from Author of "Search and Social: The Definitive Guide to Real-Time Content Marketing Wiley/Sybex 2013
   

   commented on: July 10, 2012 at 1:25 p.m.
   Great post Ryan. So true for both paid social and paid search. It's all about context, relative to business goals, conversion, and ad spend.
5. Tim Orr from Barnett Orr Marketing Group, Inc.
   

   commented on: July 10, 2012 at 6:46 p.m.
   At the risk of sounding like an old fuddy-duddy, the direct marketing folks have known that "response rates" can vary all over the map and that success must be measured in other terms. Years ago, I heard of a direct mail campaign that generated a 30% response rate, but was a total failure financially (because the cost of getting those responses was high and the profit margin on the offer was low); and, there was another campaign described that had only a 0.5% response rate, but was a howling success (because the cost of getting the responses was low and the profit margin on the offer was high). This story was presented to get people to understand that those who say a "3%" direct mail response is "good" are talking through their hats. A CTR of 0.07% might be good, might be bad; it all depends, as has been said, on what your objectives are and how you measure success.

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