People who click on banner ads are not the same people who convert on your website, according to Quantcast's CEO.
Konrad Feldman, the CEO of Quantcast recently released a very provocative whitepaper entitled "Display Clickers Are Not Your Customers." He puts forth a position that people who click on banner ads are not the same people who convert on your website.
The way that Mr. Feldman supports his argument is to look at the profiles of "clickers" from various types of campaigns and compare them to "converters" on the same campaigns. The point of comparison being the age profiles of these two groups.
He uses Quantcast's data to demonstrate that in the campaigns he observed, the profile of the clickers (by age group) were similar, campaign to campaign. Further, he observed that the profiles of the converters varied substantially from campaign to campaign. In most cases the correlation of the clickers to converters was very low.
It is important to stress that the Quantcast whitepaper is analyzing display advertising (banner) clicks and not search marketing clicks. The decline in CTR on display advertising banners has been well documented as global phenomena for many years. We have also known for some time that less than 16 percent of the online audience clicks. The vast majority of Internet users never click on banners.
If what Mr. Feldman observed was indeed true across the board, then the people who click on banner ads are likely the least attractive audience to advertise to. Our common display ad marketing practice of optimizing our campaigns to clicks (or indeed buying clicks) would be tragically wrong.
As an industry we are obsessed by both buying clicks (CPC) and CTR.
I decided to look through our recent campaigns to see if I could observe this effect that Mr. Feldman claims to have observed using Quantcast's data.
I first looked at the relationship between clicks and conversions in our campaigns. The chart below is typical of what we have observed. It demonstrates a very clear correlation between clicks and conversions over a timeline.
This would seem to suggest that where there are clicks there are conversions. So I decided to look deeper.
I looked at the relationship between CTR (click-through rate) and CTC (click to conversion) in our campaigns. This is where my journey to Mr. Feldman's way of thinking really began. What I started to observe in every campaign I checked was a clear pattern. Where CTR was going up (generally considered a good thing) the CTC was going down at a similar ratio.
The CTC rate is what my company refers to as our audience quality score. The CTC tells us how likely the audience is to convert by observing what percentage of the arrivals at the website (both post-click and post-impression) are converting.
Here is an example of the CTR raising and the CTC falling. What this is showing is that there is a direct relationship (in this campaign) to the audience quality falling as the CTR increases.
Here is a case (which is not as clear as I'd like it to be) suggesting that the inverse relationship also can exist. Here the data seems to be suggesting that as a CTR declines the CTC improves.
I have looked back at all the campaigns my company has run so far this year. When looking at this CTR/CTC relationship, I have seen this same effect in every campaign that has a measurable conversion, every one.
Using a very different methodology, I arrived at findings that seem to support the findings of Quantcast and Mr. Feldman.
If what Mr. Feldman and I are both seeing in our analysis is true in the majority of campaigns, then indeed clicks may be the audience we most want to avoid. In fact, that audience is not worth courting at all. Optimizing our campaigns to clicks and buying display clicks may actually be very much the wrong strategy.
I have to admit that the findings are counter-intuitive. One would have imagined that a higher CTR delivered a more engaged audience. That higher audience should in theory deliver a higher percentage of conversion. We are seeing the exact opposite.
Clicks on display media ads could just be the devil...
Image on home page via Shutterstock.
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Originally from Australia, Matt has lived in Asia for over 20 years. He started in the Internet in 1997 as the co-founder and employee No. 1 for SpaceAsia Media, the first Pan-Asian ad network founded in Asia. SpaceAsia sold in 2000 to Engage Inc. (CMGi) with Matt staying on after the sale. In 2003, he founded Activ8 Worldwide as a JV with Outblaze Ltd, which handled global media sales for Mail.com, Sanrio Digital (Hello Kitty), the Opera browser, plus a number of other leading brands. After the sale of Activ8's primary assets, Matt took a board director's seat on the Malaysia listed Oriented Media Group Berhad. In 2009, he took a position at News Corporation's FOX Networks as VP, Asia Pacific and Middle East. He is now general manager at Accuen, part of Annalect, Omnicom Media Group's business unit to lead the trading desk in Asia. Connect with Matt on Google+.
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