Is Clickthrough Rate Still A Good Measure For Success?
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
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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