What REALLY Affects Response Rates

New business pitches are won with terrific creative. At least, that’s what they told me in my traditional advertising days.

And to an extent, this holds true for many new business pitches I’ve been involved with at K2. It always made me feel like media placement was written off as less important, somehow. At last, I’ve been vindicated.

If you’ve followed this column for any length of time, you know that K2 watches the response rates on its campaigns very carefully. We also are very diligent about optimizing our DR campaigns for the best possible results. Lately, though, with the help of our President and CEO Lynn Fantom, we’ve been comparing those response rates to average response rates of traditional direct response campaigns. What we’ve found are some trends that are, in my opinion, unique to the online advertising world.

What do you think is the most influential factor in determining the response rate of an online DR campaign? I’ll give you a hint it’s not the creative.

All responses on our campaigns are tracked back to the referral creative, referral site and the location of the ad within the referral site. We look at all combinations of these three factors in optimizing our campaigns. Pooling our data, we find that daily optimization by ad location can result in incremental response lift of up to 1500 percent — and even more in some cases. We figured this out by simply watching the performance of identical banners across multiple sites (and within specific locations on those sites).

Compare this to optimization of a campaign by creative. When we run a number of different banners with identical offers in the same rotation throughout a site, rarely do differences in performance between those banners exceed 150 percent or so. By way of example, if you run five different banners in the same rotation across a single site, and the average response rate for those banners is 0.25 percent, rarely will you see a single banner in that series exceeding a 0.625 percent response rate on that site.

On the other hand, if you run those same banners in different editorial environments, the variation in response rates becomes more widely varied. If the average response rate is still 0.25 percent, it is not uncommon to see response rates in certain sections of specific environments scoring in the 3.75 to 4.25 percent range.

Compare these lift percentages to those in traditional direct response. (Realize I’m using averages here.) Media selection can get you 150 to 250 percent lift. Creative selection: 15 to 45 percent. What does this tell us?

It tells us that the Internet’s unique ability to make adjustments to a campaign on the fly is providing us with an opportunity. If we test enough media properties and are diligent about campaign optimization, we can beat traditional direct response at its own game.

And don’t get upset just because a couple of banners on your campaign bombed. If you get granular enough with the study of your campaign, you’ll be able to make up the difference (and then some) with some smart optimization.

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