28 September 2009

The Search For the Unifying Metric

Posted by robgraham under: Marketing Methodologies .

When I started working with online advertising in 1998, the world was a slightly different place. Back then, online display ads were still growing in popularity and campaign results still yielded a 2-3% click through rate on average.

But even then, when click through rates seemed to have become the de facto approach for measuring online display ad campaign effectiveness, I still had strong doubts about the overall efficacy of click through models as a way to determine advertising success.

For starters, the idea of click-through always makes me ponder the age-old philosophical question ‘If a tree falls in the forest and nobody is there to hear it does it make a sound?’ Sure, it’s a nonsensical question but its significance is one of being able if an event happens even if nobody is able to directly prove it. With click-through rates the question had generally come down to:

1) What is the value of a click-through and

2) how can advertisers use this metric to better understand the marketing and branding abilities of their campaigns.

The real weakness with the click-through metric, in my opinion, is that it doesn’t tell much of a story. What does a click-through really represent? For example, if an ad is able to garner enough interest in order to get itself clicked on does that mean the offer is appealing or that the ad is appealing?

We’ve known for years that ads that contain good call to action ‘power words’ like FREE generally have higher response rates but is that because they cater to the desires of consumers or because they pique curiosity? And what does that higher CTR mean from an acquisition or conversion standpoint?

Over the years I have come to the conclusion that click-through tells such a limited story that it is nearly useless. Certainly we want to be able to drive traffic to web sites and landing pages and display ads can help that happen, but putting all of our eggs in the click-through basket tends to push advertisers toward believing that getting attention is the same thing as effective branding or a good rate of conversion.

For example, if you were to open a new store on a street corner, which would be of greater value to you as a proprietor?

1) 1000 weekly visitors who walk into your store, look around and then leave without buying anything or
2) Only 1 store visitor comes in all week but makes a purchase

Now, it depends on what your marketing goals are. If making money through direct action of some sort is your goal then the metric you want to track is how much money you made. However, if the goal is branding then more exposure is good exposure.

Bottom line for me has always been, what was the campaign’s goal and how was that being measured? If it is merely click-through then there generally isn’t enough information to make a clear judgment as to the campaigns efficacy.

That said, what should we be measuring and how? Is there a unifying metric that ties everything together so we can understand immediately if a campaign is successful for not?

Ah, lots of questions but not a lot of answers. The future still has plenty to reveal.

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