Internet Advertising Click-Through Rates May Matter Even Less Than We Already Thought

Nonexistent?

Yup, nonexistent is pretty definitive.

That's what the latest study on the efficacy of click-through rate says is the conversion percentage for those who click through to see about purchasing a product.

But there are those who disagree, or think the study is trying to make a particular point that benefits another type of analysis, or believe the metrics would be different if other variables were adjusted.

The real problem, from our standpoint, is that almost 12 years after the dotcom boom and bust, we still do not have a universally accepted set of comparable data to measure the impact for, arguably, one of the most basic numbers in digital commerce. And that's just for starters. Who's in charge here?

That is exactly the problem. No one is. And the competing interests can not agree. Some advertisers want to use whatever metrics make their sales look best. Some agencies want to support whichever service will generate the largest fees for them. Some techies want to promote the net as the preferred advertising and sales platform. So, lots of people have a vested interest in this outcome and their means of achieving objectives do not necessarily overlap. It is the democratic, capitalistic way. And a potentially huge business opportunity for whoever can convince everyone else that they have a solution. But you knew that. JL

Jason del Rey reports in Advertising Age:

We already know that click-through rates on online display ads are abysmal. Now a study from the startup Pretarget and ComScore revealed that even when a user clicks on an ad, the correlation between that click and a conversion is virtually nonexistent.
Over nine months, Pretarget analyzed more than 260 million ad impressions across the campaigns of 18 advertisers, the company said, and tracked conversions ranging from filling out an online form to downloading software. In the analysis, Pretarget found that the Pearson correlation (a common correlation methodology) between clicks and a conversion was 0.01, the lowest correlation rate among metrics tracked in the study (a 0 result would mean there is absolutely no correlation, while 1.0 would signify the strongest possible correlation.)

At the high end of the correlation spectrum for the metrics tracked was what the companies referred to as "ad hover/interaction," or when a web user moves his or her cursor over an ad, thus "engaging" with it. That interaction registered a correlation of 0.49.

The study found a slightly weaker but still significant correlation between viewable impressions and conversion, coming in with a Pearson result of 0.35. Gross impressions served registered a modest correlation of 0.17.

The findings lend credence to those who have long said it's time that the industry makes a serious move away from measuring campaign success based on click-throughs, the foundation of online display advertising that's looking more flawed by the day.

"My key takeaway," said Pretarget founder and CEO Keith Pieper, "is that optimizing to viewable impressions or hover time is a better proxy for a brand advertiser than a click-through rate."

Pretarget used ComScore's validated Campaign Essentials product to gather data on viewability and "ad hovering." Pretarget, which helps advertisers target web users who have searched online for a specific keyword, used a demand-side platform to collect data on clicks as well conversion data based on cookies.

Kirby Winfield, senior VP-corporate development at Comscore, said the findings could push direct-response marketers to focus on metrics that have largely been the domain of brand advertising.

"Metrics like 'hover' and 'view' that have typically been thought of as more brand-focused metrics actually can end up being superappropriate for direct marketers," he said.

ComScore did not underwrite the study.