This article originally appeared in Fourth Source.
In the absence of real conversion data, small businesses tend to use click-thru rate (CTR) as their metric of choice. But often, CTR doesn’t correlate to the actions small businesses are really interested in driving such as in-person visits or online form fills. Let’s take a look at why small businesses are addicted to the click, and what they should be measuring instead.
For many small businesses, search engine marketing (SEM) is the gateway to digital marketing. They use CTR to measure the effectiveness of their Google AdWords campaigns and assess their Quality Score, which affects ad ranking and cost per click. When marketers move on to other digital advertising tactics like mobile, video, display and native, many assume CTR is still the go-to metric. But measuring how many people clicked an ad tells you very little about how well those ads are driving meaningful customer action.
When you are running a digital marketing campaign, your real goal is ultimately some version of a conversion. For instance, you may want to know:
- Did people who viewed my ads call or email my business?
- Did they walk into my store?
- Did they complete an online booking?
Let’s be honest. The overwhelming impact of almost every medium in advertising is exposure of persuasive messaging to the right audience. It is viewed through the eyes and consumed through the ears. Most every digital media type today can measure the number of responses post-impression, or after someone viewed your ad without a click occurring. If a customer walks into your store because they saw the sign out front, that is a view-through. View through visits are used to measure television advertising, out of home advertising, and even the value of printing a logo on a promotional T-shirt. Even radio is a “hear-through” advertising measured without the benefit of a click.
Just because prospects aren’t clicking your digital ads doesn’t mean they are not influenced by them. You need to learn to measure this interest, and to optimize your campaigns accordingly to derive more value from your marketing spend. In fact, simple AB testing can easily measure the behavior of those exposed to ads versus those in the target audience not exposed to digital ads in order to validate your digital advertising is making a difference.
Before you decide to use CTR as the dominant metric for your next digital campaign, ask yourself these four questions:
1. Do you want to reach people who like to click ads, or people who are likely to become customers?
Across ad formats and placements, the average CTR is less than .1%. That means for every 10,000 ads served, five are clicked. More than half of all internet users say they have never clicked a banner ad in their life. That doesn’t mean ads don’t have value. They are proven to raise brand awareness and increase purchase intent. But if your optimization model is set to find “clickers,” you won’t be serving ads to the right people—you will be serving ads to a small pool who, for whatever reason, like to click ads.
2. What matters more: clicks or conversions?
Conversions and clicks sometimes align, but in the vast majority of small business digital marketing campaigns, these metrics are inversely related. If you sink your budget into finding “clickers,” you’re probably not reaching the people who are going to convert into customers. And if you optimize your campaign to people making purchases or visiting your place of business, then you will actually see fewer clicks. Since these metrics are often inversely related, it is important to choose what matters to you and design your optimization model accordingly. Driving both with equal priority makes very little sense.
3. Do you want the best possible CTR or the CTR you are used to?
The lunacy of CTR is that many people actually don’t want the best possible CTR they can attain. They want the CTR they are accustomed to or can predict. I have seen this firsthand. If the CTR is too low, marketers are concerned. But if the CTR is too high, they are also concerned. They are happiest when the CTR falls within their expected range. This alone should make you question the value of a click.
It is also worth noting that click fraud is a prodigious industry problem. Forrester reports that marketers are wasting billions on display advertising due to ad fraud and unviewable inventory. When you optimize to verifiable actions like store visits or purchases, you will better protect your digital advertising investment.
How to measure real conversions
The days when you needed to spend more or run longer campaigns to optimize based on cost per action (CPA) are gone. With smarter models, small businesses can optimize to CPA on limited budgets and impression levels. That action can be whatever conversion matters most—whether that is a phone call, an in-store visit, a purchase or all of the above.
To do so, your digital marketing partner will help you use pixels on a web property to measure and optimize toward an action, such as filling out a form. To take things one step further, you can use this in tandem with GPS location data and geo-fencing technology. This will allow you to measure real conversions from people who were exposed to your ads, even if those conversions happen in-store. Furthermore, you can compare the conversion rate between people exposed to your digital ads and those who were not to ensure you are getting a “lift” from your marketing, or in other words, actually increasing sales and driving action that wouldn’t have happened otherwise.
If you want to unlock the true value of your next display, mobile or video advertising campaign, you need to embrace impression-based conversions and kick the click addiction. Doing so will allow you to optimize to the actions that really move the needle for your business.