Display Ad Clicks Drop 50 Percent, Marketers Cringe
One of the mantras guiding online marketing is to measure everything that matters and then optimize. The typical MO is to run as many CPC programs that you can afford or manage to create a baseline; do A/B or multivariate analysis to optimize; then prune low yield programs and further optimize on the ones with the best returns. But what happens when, despite adherence, to this mantra the historical performance levels of display ads starts to fall?
Recently, ComScore published a study showing the number of US consumers who clicked on display ads had dropped by 50 percent in two years. While drastic the impact could be due to a decline in the number of CPC display and affiliate programs run over that time, however; other factors were implied in the study. Between 2007 and 2009, the number of people who clicked one or more display ads a month dropped to 16 percent, with about 37 percent of those users accounting for 50 percent of all clicks. In shorthand, that means 6 percent of internet users represent 50 percent of the clicks, and another 10 percent representing the remaining 50 percent. All this indicates a seriously diminishing audience.
While CTR is a standard measure in the online advertising business, these new figures suggest that focusing on click through optimization may be an incomplete or insufficient strategy. Since when has optimization based on only 16 percent of the user base been a truly encompassing plan?
What about the other 84 percent of the audience not engaging with display ads? What does it mean for advertisers? If you believe in an efficient market and that online advertising is ahead of the overall advertising industry as recent studies indicate – then something else is at work here. Do display ads, or any ad impressions based advertising, really matter?
On my company and our partners’ sites, we have seen significant traffic spikes to our home page/partner home pages while running CPC, CPM, or CPA programs. This suggests that people are not clicking but going directly to the advertised site. Our internal analytics system has tracked multiple exposures and non-ad clickers to a conversion on our site, verifying that the display ads themselves indeed play a role in driving frequency and/or engagement before an eventual conversion on our site.
So are display ads dead? I don’t think so, but display ad CTRs are certainly suspect as a meaningful measurement. The new data and implications about branding, frequency, and engagement lead me to believe that we require a new line of thinking and analytics to measure the true value of such ad units.