Opinions

The Click Means Nothing

Posted by Rob Gatto on May 28th, 2013 at 2:33 pm

In a marketer’s world today, click through rate (CTR) is one of most commonly used metrics to determine the success of an ad campaign. The dirty little secret though, is that the click means nothing. As recent as this month on Facebook’s Q1 Quarterly Earnings call, CMO Sheryl Sandberg commented on the need to look beyond clicks. "Our focus for Atlas is on impression-based ads. Historically, a lot of online ads have been based on the last click. As people have begun to look more holistically at all the ad spending they're doing, what they find is that it's all the impressions that lead up to the last click that matter.”

Savvy marketers are realizing that to get “real” results of their ad campaigns, they must identify other KPI’s that matter depending on their campaign goals – brand awareness, retargeting, direct response sales or website traffic. The standard for measurement has changed so dramatically now that marketers are able to leverage insights from all of their data, they have come to realize that all campaigns must be tied to the right KPI.

This concept requires marketers to look at the quality of the “measurement” they are doing, looking across the entire sales funnel and what influenced a conversion vs. just looking at the conversion itself. Let’s look at two goals that all marketers have and how looking beyond clicks can help them understand how to reach more people and how to sell more products or services.

What drives reach?

Identifying top performing audiences, targeting them effectively, and finding new pockets of users that you have not yet reached.

In order to increase reach marketers need to:

  • Have a cross-channel view of campaigns, target audiences, and who is converting and who is not.
  • Leverage first party data to build audiences focusing on current users or leads - in essence bring highly valuable offline data into their online world.
  • Leverage third-party data providers to create new audiences and find those they are not currently reaching.

What drives sales?

Identifying users in the sales funnel that are interested and serving them contextually relevant ads at exactly the time they are ready to buy.

To drive sales, marketers must:

  • Make real time information a requirement for better insights and actionability.
  • Implement (or explore) attribution models that go beyond just last touch to identify upper funnel influence.
  • Look at how they are buying media today and investigate moving to a cost per thousand views (CPM) or cost per action (CPA) model.

Let’s look at a real example to demonstrate how Fortune 100 companies are moving beyond the “click.” In analyzing the top campaigns by impression volume for a major client, we found that the campaign with the highest click through rate (CTR) actually conversely had the lowest actions per thousand (APM). This was consistent with what we’d seen across other top brands, so a switch in optimization tactics from CTR to CPM was definitely in order. For marketers to influence action and determine the right KPI, they must start to look at their upper-funnel, mid-funnel, and lower-funnel to determine which creatives had the most influence where. In this case, upper-mid funnel tactics were related to engagement (store locators, video completions, etc.) and lower funnel tactic metrics were tied directly to the client’s revenue model.

By looking at all customer touch points in the journey, the client was able to focus on more precise KPIs and discover broader insights such as:

  • Buying on a CTR did not necessarily drive their reach or sales goals
  • Buying on a CPA costs basis for retargeting campaigns ignored the fact that the audience had already been exposed to an ad multiple time which created the influence to convert
  • The best CPA partners were ones with very low conversion rates, but high influence in the upper-funnel, engaging users through the journey
  • The worst CPA partners had a very high APM, sitting at the lower end of the funnel and taking credit via today’s last touch model

When thinking about what KPIs matter to you, marketers should only care about two things – driving reach and growing sales. Clicks only get you so far…they may tell you if/when someone clicked, but did this click result in increased reach, brand awareness or even a sale? What you are really after is identifying an audience that is interested and ready to buy and then influencing them to convert later on in the sales funnel. Aligning how you buy with the value you see is essential to increasing the efficiency of your media budget. The standard that has been in place for many years – relying on the “last click” - has proven to be ineffective, but identifying the “replacement metric” is still seen as the Holy Grail.

One Response to “The Click Means Nothing”

  1. Lowell says:

    Good article. Seems like so many companies forget the brand recognition counts on the web too.

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