blog.collarity.com

In some ways, we are fortunate to listen to many large publishers who are evolving quickly and seek the highest CPMs on their sites. We all know that online revenues and sell-through rates are crashing, and haven’t seen the recession bottom out yet. Recently in MediaPost one columnist wanted publishers to change their habits, in part by throwing out clickthrough rates (CTRs) to measure success.

There’s plenty of hand-wringing about how to appeal to the brand advertisers but we’re here to defend the humble clickthrough rate. We have no quarrels that brand impact is most important, but these ratios are one of the drivers that describes engagement online. Clickthroughs are certainly imperfect, but need to stay in the mix.

• For all tried-and-true brand marketers, this is a return to causal analysis. Since the old days, consumer packaged goods companies have studied all the influences on their product volumes – including price changes, product extensions, in-store tactics, media spends, and other marketplace activities. While there’s a data tsunami, there’s no doubt that branders press different marketing levers based on market share and sales trends.
• Meanwhile, brand recognition has always mattered for all media buys. Online ad sales have been growing so quickly that the focus had been on the media spending line, and how to make banners and other units an efficient reach/frequency spend. It’s true that all media vie for the ad dollars of these big spenders, and off-line media have been running their awareness tests for decades. Of course, awareness is an important factor but not literally the end-game.

Things are different online. The point is that publishers have a terrific opportunity to target dynamically in ways the other media could only dream of. Thus response rates, as measured by CTRs, are an imperfect yet valid tracking mechanism – and ultimately a causal factor that contributes to brand awareness.

It’s therefore a true head-scratcher when media cognoscenti say that CPM advertisers should belittle and ignore CTRs. Do you think the branders ignore what they are doing elsewhere, like spending money on an end-aisle display and ignoring whether that influences sales? Of course not.

What’s heartening is that the online CPM ads can be measure by more than impressions delivered to “the right places” where you think targeted audiences live. Online capabilities to target based on site content and interests associated with the visitors is a gold mine – and can be practically measured by clicks or time spent online. The humble clickthrough rate isn’t fancy, but let’s keep it in our tool chest for now.