Imagine yourself as a yield manager for a retargeting vendor that was getting credit for post-impression revenue. Your greatest margin would come from a strategy that allowed you to deliver low-cost inventory to all abandoners (cookie users having been served an ad), and then claim responsibility for a large number of return visitors/conversions that would have happened even without the campaign. Most early retargeting companies are only successful because advertisers are still willing to give credit where it's not due.
Knowing that impression volume and post-impression attribution give little insight into banner ad success, clicks and CTR have become a crutch for those hoping to understand campaign performance. Historically, marketers haven't had anything else to reference.
If asked if they ever click on banner ads, almost everyone will say "no." In fact, according to comScore/Starcom research, just 16 percent of internet users would answer "yes," and half of those (only 8 percent of all users) generate 85 percent of all clicks. Very few people click on ads, and those that do, do so often. So, campaigns optimized for CTR only succeed by narrowing the targetable audience and serving ads to users that have a higher propensity to click. This is highly effective at increasing CTR, but will return deceptively impressive results for those marketing managers who think clicks are the ultimate indicators of campaign performance. The question that marketing managers must ask themselves is, "Is my now narrowed audience of likely clickers the group I'd really like to reach, and does this strategy yield the best possible outcome?"
The answer is no.
Because typical users don't click on banner ads, advertisers forfeit a large pool of opportunity by optimizing for CTR. For ecommerce advertisers, sacrificing profitable incremental revenue for marginal improvement of CTR is unnecessary. Not all buyers are clickers and not all clickers are buyers -- in fact, most of them are not.
In mid-2011, Collective Media released findings from their study of more than 100 million users and more than 1 billion impressions, which found:
In ecommerce, and certainly in the case of retargeting, clicks have become a standard measurement of direct user responsiveness to an ad. While it's true that clicks represent an immediate movement from the ad to the website, they do not demonstrate consumer purchase intent. Furthermore, by optimizing display media exclusively for improved CTR, advertisers forfeit profitable incremental revenue and brand lift.
The organizations behind 3MS (IAB, ANA, and 4AS) are making a clear call for higher quality performance metrics. What's surprising is that engagement has, so far, been overlooked. As advertisers consider new standards for understanding display ad influence, it's important that they recognize ad engagement, and subsequent post-engagement conversions, as a viable metric that will help improve optimization and attribution techniques.
Tony Zito is CEO of mediaFORGE Inc.
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Thanks for your comment, Josh! I work with Tony at mediaFORGE. The primary reason we raise this issue is to clarify that marketers don't have to accept this as reality for their display media campaigns. There is a better option. Check out our full whitepaper at http://www.mediaforge.com/resources to read more about engagement and why we believe it's the best optimization metric for delivering strong and verifiable campaign performance. You can also read our follow up article that iMedia posted this evening.
I understand that retargeting view through can be somewhat misleading, but that same argument can be made for other top converting mediums. Paid Search top converters are typically branded keywords, meaning the consumer already has the brand in mind. Email sends are to someone that has already visited the website and signed up. Social is similar as well in that typically someone already uses the brand then likes them (not saying a lot of conversions come from Facebook).
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