Since the dawn of online advertising, marketers have been tracking click-through rates (CTR) and it remains the go-to-metric for gauging an ad’s effectiveness. Not only do clicks offer a straightforward way to track direct response, it is also easily calculated. A click on a banner ad means a new lead or a sale.
The Rise & Fall of Click-Through-Rates (CTR)
As Facebook is still the most widely-used social media site it serves as a good benchmark for click-through trends in the region. For marketers in Asia Pacific (APAC) the effectiveness of measuring CTR is supported by Facebook trends, revealing significantly higher CTRs, and lower costs compared to other regions. 2015/16 Salesforce reports support this by globally ranking Taiwan and Australia (2.02%) with the highest Facebook CTR, eighty percent higher than the global average (1.18%). In a Nanigan report, India, and Southeast Asia delivers 80% higher CTRs compared to the US (1.15%). Although Japan and Australia are ranked as having the most expensive Facebook cost-per-click (CPC) average at over $0.70, the rest of Asia is significantly cheaper, with Southeast Asia at only $0.11, fifty percent below the global average and fifty-eight percent lower than the US ($0.26).
But it’s time to move away from “Clicks” as a comfortable benchmark. The first online banner ad appeared in 1996, and unsurprisingly generated a very high CTR of 44%,. As the novelty of the new ad banners faded away, so did the rate at which users clicked on them. As of March 2017,the average CTR on banner ads, according to Google’s DoubleClick, is only at 0.05%. As CTRs continue to decrease, marketers are forced to increase investments into ad campaigns in order to reach the same results.
The obsession over increasing CTRs also led to clickbaits, web content with headlines designed to drive clicks to a website as cheaply as possible. Clickbait is essentially a modern-day successor to yellow journalism, a late-19th-century effort to sell newspapers in North America by prioritizing sensationalistic headlines over legitimate content.
While Chuck Norris, the Numa Numa guy and Mark Zuckerberg busied themselves with redefining the internet in the early 21st century, the market also became more saturated with brands and products, and the consumer’s consumption of online information changed rapidly. This transformed the customer decision making journey as it grew more complex, more sophisticated and multi-layered. On top of all this, our understanding of fraudulent & accidental clicks improved and this drove the need for an alternative metric, tracking conversions. Clicks ceased to be the only perceived justification for a successful campaign.
Getting Comfortable with the C Word: Conversions
People at work don’t get why I love using the C word! I just want us to start focusing on CONVERSIONS that drive Return on Investment (ROI)
CONVERSION means any type of metric which indicates an audience has taken an action, thus being pushed one step further down the purchase funnel. Conversion metrics may come in various forms, and it doesn’t always directly or immediately correlate to a sale. Conversion may be measured as a completed sign-up form for a test drive, a visit to a site’s contact page, a subscription to an e-Newsletter.
Recent conversations I have with marketers paint a picture of customers going through multiple clicks, and marketing touch points before making a purchase, many dropping off in the process. As the path to a purchase decision is no longer as flat as it once was, moving away from relying on clicks and more towards conversion measurement as a campaign benchmark is important as it allows marketers to judge marketing channels on their effectiveness to contribute to the desired business action as supposed to offering a blanket credit on all clicks.
In a 2015 Google study, 51% of surveyed smartphone users claimed to have discovered a new product or company when conducting a search while 87% of consumers research before entering a store. In an earlier Deloitte insight report, 81% of respondents said yes to reading reviews and checking ratings which is why review sites like TripAdvisor, and information shared via social media platforms like Facebook, now play a crucial role in the customer’s decision making. Measuring conversion is very important in today’s modern technology and information landscape where consumers have grown to be more discerning and empowered, playing a proactive role in discovering brands and their benefits. In the sequel to this article, “The True Cost of Clicks” we will continue to explore the world of clicks and conversions.