Are We Judging Banner Advertising Unfairly?

All online advertisers want to see results from their online campaigns. Most often, what direct response advertisers want to see is a certain type of behavior among their prospects: Prospect sees ad. Prospect immediately clicks on ad. Prospect converts on the website.

But what if prospects don’t necessarily want to click on an ad the second they are exposed to it? What if the conversion happens at some later date, as a result of the ad exposure?

Last year, we discussed the idea of tracking non-click conversions. This week, I’ve decided to revisit the topic after AdKnowledge released the results of its “Online Advertising Report: First Quarter 2000.”

Read the report. It will give you an idea of what you’re missing with regard to tracking conversions in your online campaigns. And when you see what you’re missing, you may come to the same conclusion I did: Something has to change about how we measure online ad effectiveness.

The most significant finding in the report, IMHO, is that more conversions result from non-click ad exposures than from clicks.

AdKnowledge assembled the results of several online campaigns and studied them carefully in putting together its report. Its analysis sample comprised over 150 million ad views. Conversion events ranged from simple purchases to registrations to simply landing on an advertiser’s home page.

AdKnowledge found that 24 percent of the conversions resulting from an ad campaign were the result of an ad click. Thirty-two percent came from users who viewed an ad, but did not click. The remaining 44 percent of the conversions came from repeat customers, regardless of whether they had initially clicked on an ad.

This revelation has ramifications for both advertisers and publishers. First of all, the publishers who complain about advertisers getting “free branding” when they do CPC deals can now complain about “free conversions” as well. Secondly (and more importantly), AdKnowledge’s report shows that those of us who are not tracking non-click data are doing something wrong. We need to track all of our conversions back to the source in order to get the best possible indicator of what drives prospects to convert on our web sites.

AdKnowledge (and several other ad management companies) can track conversion events by serving the ads in a given campaign and placing one-pixel invisible GIFs on critical pages within an advertiser’s web site. If you are an online retailer, a critical page on your web site might be the one that is served immediately after a customer has made a purchase.

In tagging critical pages this way, AdKnowledge can associate requests for those pages with ad requests from a given user through the use of cookies. After crunching tons of data, AdKnowledge can then tell you the number of conversions associated with a given ad placement, whether or not a user clicked on the ad.

Kind of puts a neat spin on cost-per-action (CPA) deals, doesn’t it? Perhaps some publishers would reconsider cost-per-sale (CPS) ad deals if they can realize revenue not only on the non-click sales, but also on repeat purchases within a given period of time.

Regardless of the report’s effect on the future of CPA deals, AdKnowledge has clearly demonstrated that the status quo in tracking ad effectiveness simply will not do. Without tracking non-click conversions, direct response advertisers are getting less than half the picture when it comes to determining which placements in their online ad campaigns are generating conversions most efficiently.

If only 24 percent of the sales resulting from your online campaign are from first-time clickers, aren’t you curious to find out what’s going on with the other three-quarters of the pie? If so, consider setting up a closed-loop reporting system that tracks non-click data.

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