September 3

Are You Focused On Conversions Or Clicks?

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Conversions

Rule #1: Connect with the people who really are your Customers.

Rule#2: Try not to waste too much money on the clickers.

Optimizing for clicks is a proven and effective approach for search advertising. But relying on display clicks to drive conversions is often a dead end because the consumers most likely to click on display ads are often vastly different from your best Customers. 

Therefore, if you’re optimizing your campaign for clicks, there’s a good chance you’re actually anti-optimizing for sales. Instead, optimize toward your ultimate objective—the campaign conversion rate—rather than toward the click-through rate and focus on developing the necessary systems and skills to understand the true impact of your ad investments throughout your Customer’s path to purchase. 

How to Optimize for Conversions

If, like most advertisers, your objective is conversions rather than clicks, you can optimize your display campaign to capture them. Here are four steps to get you started:

1. Understand the characteristics of your click-based and view-based audiences.

note: depending on the products, clickers are often not your buyers.

2. Measure view-based conversion volume as well as click-based conversion volume. Buyers are likely to take another look, and perhaps another and yet another, before deciding to purchase.

3. Judge your campaign by the conversion rate rather than the click-through rate. Or, better yet, use effective cost per action (eCPA) to measure the effectiveness of your entire advertising investment no matter how you’ve chosen to buy it.

4. Develop and apply a multi-touch attribution approach. This involves building a model to better account for the impact of all of the ads that touched your customers along their path to purchase and can help you overcome the shortcomings of click-based and last-touch attribution (attributing all credit to the last ad seen).

Sure, this is a bit different from what we’ve been taught a few years ago, but it’s proven its value frequently over the past 2 years and I thought you might like to know about it.

 

Display Ad Clickers Are Not Your Customers

Using a search engine to find information, answer a question or reach a website to buy something has become as second nature for most of us as using the remote control to surf TV channels. Search advertising borrows from the inherent utility of the search engine—consumers are presented with links that match their query and are designed to quickly direct them to specific products and services. The proven efficiency and effectiveness of this approach has fueled a boom in search advertising, which is predicted to grow to a $50 billion-a-year business in 2013.

Online display advertising, however, is a different story. People go to websites for information, entertainment and engagement with other people, not to click on ads that send them elsewhere. Only 16 percent of people click on display ads in a given month indicating that most visitors to a typical advertiser’s site get there some way other than clicking on display ads. So how valuable is click measurement as a means of assessing display ad effectiveness? Not very. In fact, this paper will show how click-based display campaigns can run completely counter to your interests as an advertiser. Optimizing your campaign for clicks—instead of optimizing for conversions—is pursuing the wrong objective. For display advertising, clicks aren’t just suboptimal—they’re anti-optimal. And they’re likely to produce significantly poorer results.

But display clickers aren’t buyers. We know this because the clicker audience profile is remarkably consistent, regardless of the campaign. To illustrate the point, the chart below contrasts the profiles of clickers vs converters in two disparate product categories—an online retailer and an insurance company. In both categories, clickers skew toward older and younger Web users. The clickers are much more similar to one another than they are to converters, the people who ultimately make purchases in their respective product categories.

Clickers vs Converters

 

Clicks: Great for Search, Distracting for Display

The path from clicking a search ad to a conversion—buying a product, downloading a brochure, locating a store—is well understood and widely accepted today. Consumers who use a search engine expect to click and will do so if the link holds the promise of providing what they’re looking for. Media buyers can easily assess the potential of various search terms to drive consumers to the page where they will make a purchase, and bid on them accordingly. Because a search ad relates to an intent expressed by the person doing the search, click-through rate serves as a good proxy for conversion, and cost per click (CPC) is a reliable guide for buying search ads. The CPC pricing model neatly aligns the interests of the advertising ecosystem’s participants: Consumers get relevant results; advertisers pay only for advertising performance because interested consumers have self-selected; and search engine operators satisfy consumers and maximize yield. As effective as search advertising is, a singular focus on this approach can lead to missed opportunities. Why? Less than 4 percent of consumers’ online time, less than three minutes in an hour, is spent on search. content, watching videos and engaging in social networks. The other 96 percent is spent doing things like reading email, browsing

That 4 percent is invaluable to advertisers, of course. Search accounts for about half of the spending on online advertising in the United States and the United Kingdom, and in some other markets this number is even higher. But how much value do advertisers derive from the portion of their spend that goes to display? The display experience is quite different from the search experience for consumers, and the influence of a display ad is more nuanced than that of a search ad. In search, optimizing clicks is essentially optimizing for conversions because they’re so closely aligned. With display ads, if you optimize for clicks, you get . . . more clicks. However, as we’ll discuss, these clickers are often not your converters.


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