When I started in digital media, all the industry talked about were click-through rates. Since there were only a few banners ads running and only a few people to click on them, the results were pretty good. We raved about click-through rates that were as high as 10 to 20 percent and drove a “targeted prospect” to a marketer’s Web site. We learned that we can create Web pages and clickable ads that can be fitted into every nook and cranny on an already ill-designed, cramped page; and publishers were more than happy to sell them to us at an inflated CPM (define) (they were targeted after all). This was before DoubleClick entered the scene and long before we could measure frequency. I’m positive that I must have reached one person 75 times with my special lease offer (I guess it wasn’t as special after the 30th view, but I’ll never know).
However, before we could break out the champagne, the click-through bubble burst, along with the economy. Almost overnight we all turned our back on it (everyone except for those wacky sites that needed traffic to get more venture capital). As the Internet grew — quite rapidly — more advertisers joined the bandwagon, and what was once a novelty, banner ads, had now become a nuisance. People would rejoice in the free content they were accessing online, but would always have to reject the annoying ads that they “never clicked on.” Click-through rates did decrease, but thanks to new ways of analyzing consumer behavior, the impact of digital advertising didn’t diminish, it only became more challenging to quantify. Brand tracking studies, Web site analytics, interaction rates, and view-through data demonstrated that digital advertising worked and was a vital element to most media plans.
Recently, the results of an update to comScore’s highly publicized “Natural Born Clickers” research, conducted two years ago with Starcom USA and Tacoda, showed that the number of people who click on display ads in a month has fallen from 32 percent of Internet users in July 2007 to only 16 percent in March 2009. Also, an even smaller core of people (representing 8 percent of the Internet user base) accounted for 85 percent of all clicks.
Diminishing click-through rates does pose an interesting paradigm. On the one hand, we all agree they don’t matter, but on the other hand, we still can’t stop talking about them. It’s like “Jon and Kate” — we dislike them, but can’t stop talking about them, which makes us dislike ourselves for not being able to stop. I have yet to be part of a media reporting meeting where the conversation hasn’t turned to the value and performance of the ads based on click-through performance. It’s easy to talk about click-through rates, because when someone does click on an ad, we’re all pretty impressed. Who are these people who click on ads? What compelled them? Psychosis or a tailored message?
My (offline) colleague informed me that he clicked on an ad last night. It was an ad promoting alumni attire for his college football team. It was on an unrelated site, but was based on content he had viewed earlier in the week. “You were behaviorally targeted,” I said. This comment either meets people with disgust, as if I told them that someone broke into their house; or with a pleasant surprise, as if, “finally those annoying banner ads are good for something.” He was pleased at the “smart” level of targeting and it made me think: the disappointment with digital advertising isn’t that it’s annoying; it’s that it has underwhelmed us in its potential. It’s capable of so much more than what we’ve done with it and constantly revisiting diminishing click-through rates is just a reminder of this.
If you’re brave (and bored), spend the next day tracking all the ads that you see online. I just did and in one minute I saw an ad for Nissan (I’m not in the market for a new car, but when I am, I may consider a Nissan), TJ Maxx (I love TJ Maxx, but hate sweepstakes), and The Financial Industry Regulatory Authority (I had to click on this ad just to see what it is and to make sure I didn’t have a computer invasion). However, I did reflect on an ad that confirms my choice in career: an ad from Overstock.com. Besides the fact that I love the online retailer, it always manages to behaviorally target me. And not with some generic message about $2.95 shipping or great deals, but with my own previously created shopping cart. The cart that I created at 3 a.m. when I couldn’t get back to sleep and had all the time in the world to shop (but not buy). Like a wild dream, the items I added to my cart the night before — a teapot, children’s clothing, and a new accent chair — were now packaged into a nice 300×250 ad staring at me as I read the latest celebrity gossip on People.com; those items that I left behind are now back, real and wanted — and that, deserves a click.
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