New Success Metrics for Online Advertising

I may have ended my last column abruptly without giving you some examples of the metrics that can be used to measure the success of online campaigns. I know most readers look to ClickZ for actionable online marketing strategies that they can use in their everyday business lives. So this week, we’ll use a fictional case study to illustrate what I consider to be the biggest threat to the online advertising industry: the exclusive use of the click-through rate (CTR) as a success metric.

Let’s say that Peter Planner is the agency guy responsible for the online marketing of the Ford Pizzazz, a (completely fictional) $40,000 luxury car that can be completely configured and ordered from a dealer online. Peter inherited this account from an agency that was fired for its subpar work. This agency had simply thrown up a bunch of banner ads on automobile-related sites and had measured CTR to gauge the success of the campaign.

Peter is a smart guy, and he wants to keep his new account. He realizes that not everything that is advertised on the web results in an impulse purchase, so he hesitates to judge the success of his online campaign on CTR. He knows that if he could borrow some success metrics from traditional advertising, he would be home free. Specifically, he would like to demonstrate that online ads can:

  • Move the Pizzazz into the consideration set of the target audience.

  • Help to associate the Pizzazz with the luxury lifestyle.
  • Boost awareness of the car and of the brand.

Why does Peter want to do this? Simply put, he knows the decision-making process that the audience for his product needs to go through before purchasing a Pizzazz. Specifically, a typical prospect needs to compare the car against other cars in its price range and feature set. He or she might need to test drive the car. He or she also might need to wait a couple of months in order to save for a down payment on the car.

Peter is being realistic in admitting that the Pizzazz is not a product that follows the “click to buy” purchase model. He knows that anyone with enough money to buy a Pizzazz on impulse would probably end up buying a Bentley or a Rolls Royce.

Peter also knows that even if CTR were a good metric to use to gauge success (which it isn’t), a fairly recent AdKnowledge study tells him that his highest click-through creative execution will also provide him with the highest conversion-to-sale rate only 36 percent of the time. So, Peter is ready to pretty much throw CTR out the window as a potential success metric for this campaign.

Peter also has some research to support the fact that online ads can increase brand value and raise awareness effectively. Although these results stem from an older study, the 1997 findings of the Internet Advertising Bureau and Millward Brown Interactive are still very valid today. These findings show that the majority of the branding and awareness effects of online advertising take place at the ad-impression level, not at the click-through level. But how does Peter show that his online ads are responsible for the positive impact on branding, awareness, and purchase intent that he’s looking for?

Peter can utilize the services of Dynamic Logic to gauge ad effectiveness in these areas. Dynamic Logic’s AdIndex product integrates with his campaign and serves cookies whenever Peter’s ads are served.

Dynamic Logic recruits two panels by running its own recruitment ads on the sites on which Peter is advertising. The panels consist of people who have seen Peter’s ads and those who have not, and they are separated by the presence of the cookie. By comparing responses to an online survey given to both panels, Dynamic Logic can give real-time branding, awareness, and purchase-intent metrics to Peter while his campaign is running.

This methodology cleanly separates the results of banner advertising from the results of every other medium that Ford might be using to promote the Pizzazz, as prospects who haven’t seen the online ads are just as likely as the folks who did see them to be exposed to Ford’s offline advertising. As the results build statistical stability, Peter can make optimization decisions based on his own set of metrics, much like he would in an online direct-response campaign.

At the end of the campaign, Peter is left with statistics that hold him accountable for the campaign he designed for Ford. However, instead of trying to prove success by talking about click rates, Peter knows that he moved approximately X people closer to considering the Pizzazz as an option for their next new automobile. He also knows that he lifted brand awareness by Y percent among the people reached by the online campaign. He also knows that approximately Z people think that the Pizzazz is a direct competitor of the Porsche Boxster and the Chevrolet Corvette, instead of thinking that it’s a souped-up Pinto. Obviously, Ford would see tremendous value in this, and you could see how Peter would be up the proverbial creek without a paddle if he stuck to CTR as a measure of success.

Why is the notion of new success metrics so important now? Look at what’s happening to our industry. Dot-coms with an advertising revenue stream are suffering. DoubleClick releases earnings, turns a cash profit, and some biscuit-head analyst gets quoted in the resultant news story saying, “No one clicks on banners anymore.” Somewhere, a venture capitalist is deciding whether or not to dole out $2 million in bridge funding for a struggling ad-supported dot-com, and he or she will decide to let that company sink like a stone because “no one clicks on banners anymore.”

We all know that the click represents only a small fraction of an online ad’s value. Last week’s column was supposed to demonstrate that we all need to concentrate on the inherent value in the ad impression and that we need to wean ourselves off CTR as an indicator of success in most cases. We (as an industry) could also stand to benefit from making public some new case studies showing online advertising success, and we can’t do that by showing off 0.2 percent click rates.

New public case studies are vital to the success of the online advertising industry as a whole. If our metrics don’t adapt as quickly as the various methods of online advertising, many of us will find ourselves without jobs inside of two years.

So, online advertisers, the next time you’re tempted to use CTR as a measure of success, think not only about the disservice you’re doing your client, but also about the disservice you’re doing to the online advertising industry in general. If clients can’t see the whole picture of their success online, they will pull budgets back into traditional advertising.

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