Advertisers are too myopically preoccupied with click-through rates in measuring the overall effectiveness of online advertising campaigns, when they should be taking a broader and more diverse approach with a variety of goal-specific metrics in today's "post-click" world, insiders have observed.
The click-through rate (CTR) is an "archaic metric" that should be abandoned altogether, Lee Smith, CEO of platforms at Omnicom Media Group Asia-Pacific, told ZDNet Asia in an e-mail interview.
"The proper ad measurement tools did not launch together with banner ads during the 1990s, [so advertisers] all tried to quickly develop a success metric, the click-through rate--a pathetic relative measure…that somehow along the way earned the right to play the role of online advertising's success KPI (key performance indicator)," he said.
Technology--and society--have, however, advanced in the last two decades, Smith pointed out. "People today are engaging, downloading, buying, sharing and tweeting regardless of CTR…in a post-click, hyper-connected world."
Yet there are advertisers and marketers stuck on CTR because they don't have the extended or extensive knowledge, tools and resources to get away from it, and who also face inherent pressure to "optimize something", he explained.
Nick Fawbert, CEO of Third Space Asia, reminded that click-through rates measure only one thing--the propensity of the online audience to click an ad--and the reason why many advertisers keep measuring it is "simply because they [can]".
But in the absence of other metrics--and hence results--of other factors that influence success or failure of a given ad campaign, CTR data would often be used incorrectly or disproportionately to judge the overall campaign effectiveness, said Fawbert, who is also secretary of the Interactive Advertising Bureau (IAB) Southeast Asia. This shortcoming also affects campaign-related data, such as demographic appeal and consumer interest, he added.
According to Fawbert, modern online communications have resulted in an incredibly complex digital ecosystem, and also opened up several metrics that can be utilized to measure the impact of various elements of a campaign strategy. Hence the role of CTR today is shrinking, not because it can't measure accurately, but because advertisers must look into "the other areas of the marketing funnel" with more metrics to obtain a bigger, fuller picture of whether their online advertising strategy is working, he pointed out.
The onus is on the advertiser to select a manageable range of appropriate metrics that will most accurately measure the achievements of the campaigns against the goals they have set, he added.
Leonard Tan, CEO of PurpleClick Media, concurred. In an e-mail, he noted that it is crucial to define campaign goals and determine how success will be defined and measured right from the onset.
He warned that this could turn out to be a steep learning curve for marketers who tend to place too much emphasis on CTR. Different goals will dictate which specific metrics will be used; for instance, click-through rates are important only if click volume is important. If the goal is lead generation, then the number of acquisitions and the cost per acquisition will be the success metrics.
Consider ad campaign flow
Mark Little, a London-based principal analyst with market research firm Ovum, said advertisers should realize that CTR levels themselves are dependent on the ad campaign as a whole, and not just the individual ad that got clicked.
This is because customers today follow a trail of touch points through various media online or in the real world, all of which influence their decision before they finally and actually click on the ad, whose CTR is then recorded and measured, he explained in an e-mail.
"CTR is by no means defunct, but it should be seen in the wider context of engagement with customers across other online media," he said. The "last-click wins" business model doesn't recognize the influence of touch points preceding the last click that leads to purchase or action. Hence there is a danger of focusing too much on a single ad unit's CTR, which have little relevance to the overall campaign's performance, he cautioned.
Advertisers therefore need to take a 360-degree perspective of advertising metrics if they want to better understand their campaign performance and manage media buy, Little pointed out.
But since sophisticated ad metrics and models, such as engagement and mapping, are not yet widely adopted, it is unsurprising that advertisers are sticking to the simpler metrics that are easy to understand given the complex online environment, he said.
Smith agreed that online measures in isolation are no longer enough in today's media world, adding that there are critical measures beyond click response rates in the platform or online media space that must be looked into.
Advocacy and efficiency, he proposed, are the current "new marketing success pillars" because they involve both measure and influence. Word-of-mouth has always been key in marketing, he said. As for efficiency, because brands can now buy consumer impressions one at a time--as opposed to bulk audience brackets--they can avoid the scenario of "half my advertising is wasted, I just don't know which half".
Ultimately, brands need to understand how each advertising medium contributes to the aggregate success and achieve the best cumulative outcome, noted Smith.