Online Traffic: Quality Matters

All traffic isn’t created equal. For an advertiser, online traffic from different sources can perform very differently.

Quality matters and affects advertising inventory, availability, and pricing. In 2005, this will become an even bigger issue as consumer packaged goods (CPG) and other offline advertisers transfer video-based assets online and see the need to integrate them with other online formats. This will translate into greater demand for effective, quality inventory.

Measured by user response, traffic quality can be assessed across several dimensions:

• Usage. Site visitors can be categorized as high-frequency power users, regular visitors who consistently return, and testers who are first-time visitors. “Would you prefer a loyal user who proactively chose the site or one who got there by accident?” asks Randy Kilgore, The Wall Street Journal‘s advertising VP, who believes this is an overlooked topic.
• Targetable segments. Use segments based on demographics, psychographics, or other advertiser-friendly interests.
• Category position. The dominant site in a segment receives a disproportionate amount of traffic and mind share.

Publisher Perspective

Driving quality traffic to a site hinges on the following:

• Content relevance and quality, including editorial excellence, brand, and subject matter, all contribute to a site’s ability to attract and retain visitors and pass credibility along to its advertisers.
• Site usability relates to how easily users find what they’re looking for. Great content readers can’t find is useless.
• User engagement is the site’s ability to get visitors to use many parts of the site, interact, return, and refer it to others.

Monetizing site traffic requires the following:

• Know your audience. Understand who uses your site, where they go, and why. Get into your users’ heads to understand their motivations, thought processes, and response drivers. Provide full user profiles.
• Categorize traffic into segments advertisers find useful and attractive.
• Develop and adapt ad units to meet advertisers’ needs and ensure they’ll draw an appropriate audience. Balance Interactive Advertising Bureau (IAB) standard units with units adapted to site.
• Provide useful site information beyond standard reporting packages. Proprietary research should yield usable insights that advertisers and agencies can’t get elsewhere.

Advertiser Perspective

A strong site with an involved readership, while important, isn’t sufficient for a successful advertising campaign. Advertisers must:

• Develop a well-defined advertising plan integrated into an overall marketing strategy.
• Understand metrics driving advertising response, such as cost per action (CPA), CTR (define), conversion rate, return on investment (ROI), and related branding measures. Chip Smith, Monster‘s senior VP of online marketing, thinks this is the most critical aspect for advertisers.
• Have efficient post-publisher processes, including tailored landing pages, registrations, or purchase processes, and the ability to measure latent and cross-media actions. Without these, strong click-throughs may not convert. Continual testing is important.
• Communicate goals and needs with publishers and agency.

Agency Perspective

Working with publishers and advertisers, agencies take a holistic view of the campaign and ensure each touch point is optimized. Agencies must:

• Request online advertising briefs with clear media, creative, and tracking objectives. These should consider the overall branding and advertising program to ensure campaign effectiveness and media synergies.
• Optimize ad placements across off- and online media. With expanding digital options, Jason Heller, CEO of Mass Transit Interactive, recommends online agencies take the same integrated approach to online media they do with offline. Integrate online with reinforcing offline campaigns.
• Collaborate with publishers to share knowledge and achieve optimal results. Avenue A/Razorfish media VP Sarah Kim believes this is key.

Traffic Quality Issues

As online advertising expands as an integral component of an effective campaign for online and offline products, the need for quantity and quality of impressions increases. Important issues to monitor include:

• Price volatility. With demand for relevant, targeted online ad inventory increasing and publishers challenged to significantly increase traffic, there’s pressure to raise prices.
• Inventory. Under-delivery is an issue for large advertisers that manage online media placements on a portfolio basis that are tracked against past experience. Publisher refunds or make-goods often don’t compensate for opportunity losses due to delayed acquisitions or foregone revenues. These damage trust and advertiser-publisher relationships.
• Distribution challenges. These can affect everyone’s ROI. “Traffic must comprise your core target,” says Paul DeBraccio, Interevco CEO. “Broadly undifferentiated page views usually cost advertisers money.” Challenges include:
  • Strong, untargeted page views for which users can’t be segmented effectively for advertisers
  • Lots of users who are difficult to segment on main pages, but are targetable in advertiser-friendly niches
  • High number of page views and unique users where usage is disproportionately driven by a loyal core

To overcome these issues and make advertising more effective:

• Create ad units that leverage targeted, measurable audiences who perform well for advertisers and yield high CPMs (define) for publishers. According to Mark Westlake, About senior VP of sales and marketing, “Advertisers want advertising opportunities that break through the clutter.”
• Cap impressions served to ensure effectiveness and reduce ad fatigue. Atlas found the best overall conversion rate occurred after 5-6 exposures. This is particularly useful when page views are driven primarily by a group of core users.
• Create separate entrances or areas for targeted content to yield a tailored experience and maximize ability to monetize traffic. FT.com‘s Industry Sector Index pages contain pertinent headlines that promote valuable content to would-be subscribers and increase impressions, according to Shauna Monkman, VP of global online sales.
• Align sales and marketing goals with the site’s demographic and usage reality. Marketing should drive traffic, create new advertising opportunities, and provide supporting research. Sales should acquire clients who need the type of impressions the site serves.

Analysis

To make traffic more effective:

• Evaluate past performance and develop benchmarks. Track indicators such as CPM, CTR, conversion rate, and CPA. Monster develops creative based on analytics. According to Knight Ridder Digital senior Internet director Dipik Rai, “Advertisers benchmark expectations against search keyword buys. As a result, other media buys must be more productive.”
• Assess site traffic using syndicated data and analytic packages.
• Develop a marketing allowable. For direct marketers, this breakeven analysis indicates the maximum that should be paid for marketing. Often, it’s converted to a CPM or CPA:
  • Marketing allowable = net sales – variable costs – premium costs – overhead
  • CPM = marketing allowable/(impressions/1,000)
  • CPA = marketing allowable/acquisitions

   

• Research audience attributes to provide a deeper view of the user who isn’t covered by syndicated research or other site tools. A third-party supplier aids research credibility.
• Monitor competitors to determine where they’re advertising (or getting advertisers).

Though all site traffic may not be equal, it’s your job to ensure it’s optimized to achieve its greatest potential for both the short and long term. Content, context, and ad format all contribute to creating the best consumer experience and maximizing advertiser value. Ultimately, this requires collaboration between publishers, advertisers, and agencies.