Bots are problematic on many different levels. They require increased server capacity for publishers, ad servers, tracking servers, and all parties in the chain. By flooding the equation, they increase our effective Human CPM (hCPM). The most disastrous impact of the bot influx is the inflated CTR numbers that result. This inflation causes us to push more of our dollars toward bot targeting that is a detour from our desired human audience, but makes a metric look positive.
As a marketer, you’re conditioned to focus on vendors with the highest CTR. It’s a simple metric -- one that you can compare across vendors. But it’s also one prone to dramatic manipulation, so you're wise to take it with a grain of salt. If sellers know they can get more business and a higher CPM by having a better CTR, it is in their economic interest to manipulate the numbers that way. When they allow bots into the equation, there is a huge impact on real CTR.
Just as we illustrated last month evaluating vendors based on the Human CPM (hCPM), we’ll now review how to compare vendors based on the Human CTR (hCTR). The calculation for hCTR is: CTR - (CTR X % of clicks by bots).
Let’s compare our two vendors, BotsForCash and HumansAreBest. In my previous column, we showed both vendors had the same $10 CPM, so at first glance they looked similar. But when we looked at their impressions, we saw a big difference in the hCPM.
Now, let’s give the two vendors a CTR spread you might see in the real world. Let’s say BotsForCash has a CTR of 0.2%, whereas HumansAreBest has 0.07%. Again, at first glance, BotsForCash looks like the better vendor. It seems to have almost 3X the CTR. With the same CPM, the CPC of BotsForCash would also be almost 1/3 the cost of HumansAreBest. Normally, we would think we should drop HumansAreBest from the plan and move budget to BotsForCash, but when you look at the bot effect, the numbers show an interesting swing.
Generally speaking, bots click at higher rates than normal humans, so the higher the bot rate is for the impression, the higher it is for clicks. If BotsForCash showed that 60% of impressions were to bots, it may have 80% of all clicks are to bots. Let’s give HumansAreBest 10% of impressions and 15% of clicks to bots.
Now when we calculate the hCTR, the tables reverse themselves. BotsForCash has an hCTR of 0.04%. HumansAreBest has an hCTR of 0.06%. So, while simple CTR showed BotsForCash with 2.8X the CTR of HumansAreBest, when we calculate the hCTR, we find that HumansAreBest is actually 1.5X better than BotsForCash.
If we had dropped HumansAreBest and kept BotsForCash, we would have done exactly the opposite of what we should have done when you consider the human metrics. For these are the metrics where our focus as marketers always should be: on humans. At a high level, this sounds obvious, but caught up in the transactional process of buying media, this is probably the most common mistake marketers make in digital media execution.
But, taking a step back and arming yourself with a regard for the Human CTR, you are in a better position to avoid making the mistake again. The moral of this common story is to always look at the whole picture when you compare vendors. You might be getting less return on your spend than you think.