There is a “new sheriff in town." We all know (or should know) by now that CPC is dead. Click-through rates, once the hallmark metric of Web success, have proven to be irrelevant and it is time we moved on.
Time-tested analysis has established that there is NO relationship between click-through rates and success of a Web campaign. There are two related factors here:
1) Just because someone clicks on a banner or link does not mean that they do anything on the site they are sent to. In fact, the correlation of clickthrough and back-end action of any sort varies all over the lot.
2) An increasingly large percentage of consumer reactions to a Web campaign are from those who are exposed to a banner but do not click and later visit a site. While the Web average is in the 30% range, this number rises to higher than 50% when traditional, offline media are employed at the same time as Web.
A “surround sound marketing” campaign increases the chance for post impression rather than post-click. We had one such campaign where the overwhelming majority of conversions took place without a user clicking on an ad.
Also, it should be noted here that the longer someone is on the Web, the more likely they are to be a post-impression rather than a post-click visitor. In the future, click-throughs may be largely limited to newbies.
So, what is CPW and why don’t we just use CPA? CPW is cost-per-whatever a client is trying to measure. This could be an action such as registration or purchase; it could be a passive measure such as pageviews or unique users. Cost-per-pageview has proven to be an especially effective measure for new media whose whole model is selling advertising on their site. In effect, they make money on the spread between the difference in pageviews that they sell and pageviews that they buy.
CPW can also apply to more sophisticated metrics. For instance, a client may wish to evaluate a visitor not on their first visit, but may want to try to emphasize sites and creative that brings back visitors multiple times. We have one client that believes that visitors are only valuable if they come six or more times to the site. In this case, we would measure repeat visits and place future dollars on sites that do the best job of bringing consumers who are frequent visitors.
We are not suggesting that CPW be a basis for payment. (Although I do expect that some sites will offer this as back-end tracking becomes more sophisticated). CPW should, however, be the basis for evaluation of sites and creative. After all, isn’t it all about the client and ROI?
This is just one more reason why third party ad serving and the resulting metrics are crucial. With the technology set we have today, we cannot measure post-impression activity and true CPW without the cookie references left by the third party server. So, this is just one more plea to the major sites to accept third party metrics as