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Why the Click Is the Wrong Metric for Online Ads

Mere Mouse Move Can't Measure Influence; That's Good News for Publishers

by Abbey Klaassen
Published: February 23, 2009

NEW YORK (AdAge.com) -- The great paradox of the web is that it's an interactive medium and everything can be measured. And that's wonderful -- unless you're measuring the wrong thing.

In the past several months, there has been increasing evidence that the most easily measured metric on the web, the click, is not the right metric to use for many advertisers. And that's good news for publishers struggling to monetize their content with online ads.

Fixing online ads
Part of a series

Simply put, many advertisers in the past gave most of the credit for a sale or conversion -- which in the web world could include anything from visiting a website to printing an online coupon -- to the last ad clicked on or seen by a consumer. But that means brand-focused sites such as NYTimes.com and MarthaStewart.com and even social-media sites such as Facebook and MySpace lose credit because they are often not where a consumer will see that last ad. And when they lose credit, they lose advertisers, and when they lose ad revenue, well, you've read that story.

"Publishers have a lot to gain," said Steve Kerho, VP-analytics, media and marketing optimization at Organic. Mr. Kerho has been doing lots of analysis on how online-display ads affect search and conversions and found that in some cases, a display ad can increase a search ad's click-through rate 25% to 30%. If he had simply measured the clicks from search, he would have missed the display ads' influence.

The evolution toward better attribution models has been occurring over the past several years. Yet by some informal estimates, as many as half of all online advertisers are still measuring using rudimentary models, such as the click, which is hurting publishers.

Circular problem
John Squire, chief strategy officer of web-analytics firm Coremetrics, which today is launching a service that helps marketers give proper credit to their many online ads, likens it to an offline example: You're headed to the supermarket and on your way in you see the big sign in the window advertising ground round for $3.99 a pound. You need some anyway, so you buy it. In the online world, which measures the last ad seen, that sign alone would be given credit for your purchases in the store. But it's quite likely that you were going shopping in the first place because you saw something in the weekend circular that you wanted to buy or maybe you heard a radio ad. Under the last-ad-attribution model, the circular is worth, at worst, nothing, and at best far less than the ad for ground chuck in the storefront.

"[Online advertising] is not, by any stretch, always direct-response advertising," said ComScore CEO Gian Fulgoni, whose report, "Wither the Click," has been making the rounds in the marketing industry since he introduced it in December at a Wharton Business School conference. "In the offline world, media analysts don't think of an immediate reaction to TV or print ad."

The ComScore research, which studied 139 online ad campaigns by marrying data from its panel of U.S. internet users with shopper data, found online ads, even when they didn't result in a click, increased a consumer's likelihood of making a purchase at an advertiser's retail store by 17% and increased visits to a marketer's website by an average of 40%.

Microsoft's Atlas has been touting an alternative to last-ad accounting for the past year and research it's introducing today found that in the final two days before a sale or conversion, consumers see an average of five and a half ads. In the 90 days leading up to a sale consumers see 18 ads for a product.

"Virtually any seller that's not a search engine or affiliate [network] is not getting the proper credit for their ads," said Esco Strong, market research manager at the Atlas Institute. "There's a disconnect in terms of the actual work that's delivering people through that [sales] funnel and the sale and there's a disconnect in how advertisers are measuring their ads and planning their campaigns."

Analytics, optimization
Randy Rothenberg, the CEO of the Interactive Advertising Bureau, calls it "blunt-force mass buying combined with direct-response measurement metrics."

One solution for publishers? Organic's Mr. Kerho suggests they embrace analytics to help clients figure out how much to put in each bucket.

"Come to the table with solutions to reach the right audience with the right solution at the right time," he said. "There isn't a client we sit down with that isn't about analytics and optimization."

38 Comments

By softomic | Nutley, NJ February 22, 2009 09:27:02 pm:

I absolutely believe that the click is not the most accurate measure, but the fact that it is the simplest to understand and also, one of the easiest metrics to communicate to management, it will be very hard to unseat its popularity. In the web world you need to answer this question: hits are to unique visitors as clicks are to ____________ .

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By picnichouse | Chicago, IL February 22, 2009 10:27:20 pm:

If clicks are the wrong metric, what's the right one?

I keep being told that there's more to it than the click, but if I know PPC is working for me because I can measure the ROI. Why would I spend money on display advertising, where to the degree one is able to measure its ROI, it appears abysmal?

I'd love to spend more money on display ads, but every time I've done so, it's felt like a terrible waste of money.

- Andrew

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By jonathanmendez | New York, NY February 23, 2009 09:05:31 am:

we've known for a long time display ads influence search and last click attribution is not an accurate metric so i have a hard time believing that the value of display here is not already built into the free market system buyers and planners operate in. My question is how does remnant vs. premium inventory factor into this equation and once we see that data does this idea really end up helping or hurting publishers in the long run.

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By DOM | PALO ALTO, CA February 23, 2009 11:28:40 am:

Wow. It's great that this issue is being raised. However, this is nothing new. Same story since the Web 1.0 days as this could have been written over 10 years ago...actually, I did in the Lilypad white paper: http://twitclicks.com/xotk!

The twist today is that too many so-called online "marketers" either protesth too much (like the effect of branding but want to pay like performance) AND/OR opt for the easy way out and fallback on search - a FUD mentality. The former is solved by better media-side negotiating and the latter by training and education.

It is called branding and it's about way more than measuring clicks.

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By Jaypiddy | Vancouver, BC February 23, 2009 11:38:53 am:

Well we in the Interactive business have only ourselves to blame really. For years we touted the measurable click to justify our validity in the ad game. When no one wanted to advertise on the web and we were practically giving away inventory we needed to prove the medium was worthy. "Hey you can measure our medium!" we shouted. Now that the web is no longer shinny and new and folks have been burned by low end banners that took you through a journey of pop-up hell and bad user experiences. The reluctance to click is now biting us in the ass. Clients in my meetings are asking why the great retreat on the click?

Awkward at times but they are starting to get it I think. Be careful of what you hang your hat on in the future.

JP Holecka
www.powershiftermedia.com

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By AnnBetts | Tempe, AZ February 23, 2009 11:41:57 am:

It is so difficult for some marketers to get behind display advertising; understandably so. A lot of times the ROI isn't all that great, and there is a question about if it makes a 'blip' at all. That is why analytics are SO important!

Best suggestion: select very targeted, very effective display advertising that provides detailed reporting to back up and explain results. One of the easiest ways to do so is through retargeting; when you only show display ads to customers who have already visited your website.

Most retargeting campaigns result in incredible ROI (300% and up). Retargeting is also a very affordable service... especially when you have your campaign set up on a CPA or Rev Share system. Make your service provider accountable – you only pay them when they get you results.

Suggest that marketers at least start to explore the world of retargeting . FetchBack is the only company that specializes in retargeting - great place to get started.

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By Stephan | London February 23, 2009 11:55:23 am:

Accurate media measurement is a top priority for most of our clients, but it is important to understand that it is a journey, not a destination.

Start with the current last click wins approach and ensure that you de-duplicate between channels (email, display, search, affiliate, network etc) using a solid methodology. Then start applying some attribution business rules to see how exposure to multiple channels improves impact or how to apportion credit between multiple channels.

Most valuable, however, is the recent work we have started doing by combining web analytics customer segmentation data with campaign performance reports. By doing this you can answer questions like "With which campaign/placement did I reach my most loyal customers?", "What campaign touched the largest number of new customers?" or "Did a particular campaign skew towards a particular product or service". None of these insights are conversion focused, but can be very useful in terms of fine-tuning messaging, offer, and even budget allocation.

Stephan Pretorius
Acceleration

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By RJ | EWING, NJ February 23, 2009 12:58:59 pm:

"Online" as an industry is over 10 years old, while we've accomplished a great deal, it's important to remember we are still in the beginning stages of learning.

One should never let their view become so myopic (ie. performance focused on clicks) as to over rule common sense. Promotion on good trust worthy brands has always carried value.

Perhaps the technology will come so far as to allow us to retroactively go back and "collect" on all of the value transfer that has occurred at the expense of brand advertisers...

I say this jokingly, but I'm sure there's a class action attorney out there somewhere who would lead a class action suit against Google on behalf of a consortium of brand advertisers to "collect" on all the positive impact of display (that search and performance affilates have benefited from) over the past decade. Publishers of the world unite!

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By peles | Raanana February 24, 2009 03:19:11 am:

Click in many cases is the wrong metric for advertisers well. As a media buyer i always stayed away from cpc metrics when buying display, as ctr is the easiest metric to manipulate. And eventually what count is either the ecpa for the advertiser and or the ecpm for the publisher. Manipulating ctr helps to bridge the gap. If tied in with fixed cpc at least one side loses (publisher or advertiser).

Peles
DSNR media group

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By markhcohen | FAIRFIELD, IA February 24, 2009 10:37:37 am:

Great article and great responses. Indeed, the industry has mistakenly attached online success to clicks and clicks only. Ah, not to mention the last ad viewed.

When I first purchased online ads in 1996 I had one metric in mind - conversion. Clicks were lovely, but if they didn't lead to a conversion - that I was able to track from the click on the ad through to the opening of an account via a phone rep (I was in the mutual fund business) then the ad didn't do its job.

This is not so much a conversion story as it is an objectives story. My objective was conversion, what is yours mr or mrs. marketer? The issue as I see it is that this industry is too hung up on one size fits all metrics to justify spend and if this medium that changes every day has taught us anything, it is, clearly, that there are never enough sizes...

So I say that you're all right dependent upon the prospective media purchaser. Now you just need to figure out how to sell to that purchaser based on their needs, not yours.

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By ioman | Lake Oswego, OR February 24, 2009 11:21:56 am:

A lot of good comments on here. Clearly there are two separate groups here, those looking for direct results, and those looking for brand exposure.

The problem with the internet is that it melds two distinct worlds, that of the Yellow Pages world melding with that of the NY Times or big publisher world.

People place ads in the Yellow Pages for sales, not exposure. They can measure results directly. It's not so much the case with that full page ad in the latest Wired magazine.

But when it comes to the net, you have those looking for Yellow Pages type measurements out of the front page of a huge publication. Dollar-for-dollar you are not going to get the same results.

Clicks are a good measurement tool, but only for the right campaign.

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By pdaboll | los gatos, CA February 24, 2009 01:00:15 pm:

I have been in this business for over twenty years, and it is remarkable that a similar piece will circulate every quarter or so. For branded advertisers, the click has never been a good measure of effectiveness. In fact, there are numerous empirical studies that show that there is virtually zero correlation between CTR and ROI for many brands. That doesn't mean you throw it out entirely, but it does mean you can't simply optimize on one measure. I like to ask (as Little/Lodish asked years ago) do you want to be "vaguely right or precisely wrong". CTR for brands is the precise, but incorrect measure.

For some reason, in the media business we love to oversimplify performance measurement. The fact is, that when we are dealing with human beings and their response to marketing stimuli, the math is messy.

In my view, the "new" attribution models be just won't be viewed as credible by the industry but viewed as a self-serving pitch to justify spend.

Here's an extreme example of how attribution models can distort the value of an impression.

In any exposure, you can "attribute" value from a previous ad exposure. "attribute" is euphemism for "guess". Suppose my grandmother was exposed to a Tide commercial and became a loyal Tide user 60 year ago. As result, my mother and all of her children are Tide users. I should then "attribute" generations of Tide purchases to that campaign of 60 years ago.

Measurement of advertising is tricky, but as Einstein said: "we need to make it as simple as possible, but not simpler".

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By Michael | New York, NY February 24, 2009 03:49:20 pm:

The click is absolutely the wrong metric because, it's so very arbitrary and easily manipulated. The purpose of an ad is to engage the user and ultimately convert, whether your conversion is page views, # of videos played, purchases, downloads, etc.
The future of online tracking hasn't arrived yet. None of the 3rd party systems are able to accurately connect the beginning to the end of the buying process. Which is why we still attribute large percentage of the final conversion to the last click or last ad seen. The tracking system needs to evolve to report on the web of keyword or banner ad relationships.

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By Mike | NY, NY February 25, 2009 10:05:31 am:

I can't believe it has taken so long for this discussion to emerge. Obviously the click is only part of the equation.

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By malouie | San Francisco, CA February 25, 2009 04:00:12 pm:

We need a standard for measuring and comparing multiple ad formats (RSS, email, text, display, flash, video, etc.). The IAB should encourage this. If that is in place, you can more effectively say that clicks are the wrong metric.
Marissa Louie, AD-Village.com

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By Mike | NY, NY February 25, 2009 06:26:53 pm:

Yes metrics are super. But it is so obviously about more than clicks it's ridiculous to be even discussing whether it is. We should be discussing what it is about, and should have been for at least the last three years and then online advertising would be worth more than a gobstopper and a piece of purple cloth.

http://adage.com/abstract.php?article_id=118979

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By Alain | London April 15, 2009 08:18:49 am:

The biggest challenge with measuring online advertising is attribution. The industry has been stuck in the last click model since its inception. In short, the last click model negates the value or contribution of everything that preceded that click. Imagine if the winning Track & Field Relay Team in the Beijing Summer Olympics was only given one gold medal the medal given to the last runner to carry the baton and cross the line. It would not be fair, given the other three runners contributed equally to the winning performance.

This is how conversions are attributed under the last click rule. If all credit is given to the last click action, it is only a matter of time until the media that drives that prospect down the conversion funnel is discarded (and that funnel becomes smaller and smaller). At Web Liquid we have been aware of this dynamic and been launching Exposure to Conversion studies for close to 18 months.

Furthermore, a study on online advertising has shown that click performance is the wrong measure of ad effectiveness in the long run. According to the study, 6% of the heavy clickers called Natural Born Clickers account for 50% of all display ad clicks and cannot represent the total online population.

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By adil_ahmed79 | Karachi April 26, 2009 09:06:12 am:

Well completely agree with this and I strongly believe that if the aims and objective (branding, more traffic to the website and more leads etc...) from an online campaign are completely laid and then a strategy is defined around it then we can always have some benchmarks prior to the the launch of the campaign. A proper defined strategy seems to be missing in many online campaigns which force the advertisers to question the less click rate of the campaign. It is one of the most important jobs of the Digital Media Agency to help the client in driving the strategy and make them understand the possible results. For example if the campaign is a branding campaign on a top social media website, then it is out to receive less clicks because the objective is branding on not to generate more traffic to the website. The advertiser may be looking for reaching out to more users and at the end of the campaign the best yardstick to judge the campaign would be the number of unique users exposed to the ad and the number of times the ad was seen by each unique user.

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By jkrawl | Chicago, IL July 28, 2009 02:05:53 am:

Let me be upfront....display advertising is great for the publisher, but can be catastrophic for the advertiser that is working within a certain budget. I am a firm believer that ROI is the name of the game when it comes to marketing. If you invest in a certain type of advertising, and you rarely generate any returns, then you need to rethink your marketing strategy.

How many times have you heard of a company that invested millions for one super bowl commercial, but lost greatly because of it? Brand advertising sometimes doesn't work.

That is why the best method is to create advertising channels that will bring a very specific, targeted visitor to your site. This is why I love the CPC model of advertising. It gives me a very easy metric that I can monitor and control.

So to me, the click is the right metric to measure.

Frank
http://www.absrocketpro.com

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By BPoston | Raleigh, NC August 7, 2009 08:19:21 pm:

If I were P&G and had a huge ad budget, then maybe branding would be a good idea. But I don't think that there is a good way to measure the true ROI for branding with display ads, and if there were, I'm no P&G and I don't have a budget. so I want to make sure that ever dollar I spend generates revenue. I just can't get my head around display ads giving me the bang for the buck that PPC an other forms of targeted traffic production do today.

Ben
http://www.howtobuildgolfclubs.com

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By shmitche | tampa, FL August 7, 2009 10:07:49 pm:

Display ads are are great for brand awareness and getting your traffic to trust you but when it comes to ctr. it's pure garbage (don't get me wrong there are exceptions to this). I know you might not trust my experience in online marketing but, new research from Comscore supports the idea that display ads shouldn't not be measured by their ctr., Comscore compared 139 display ad campaigns with a control group of ads. It's pretty obvious that the display advertising model, despite a the issue of little clicks, can have a significant positive impact on: visits to the advertiser's website (a good boost of at the least 46% over four weeks), the positive chance of consumers conducting a search query using the advertiser's branded terms (up at least 38% over a four week period), consumers' likelihood of buying the advertised brand online (average 27% lift in internet sales), and consumers' chances of buying at the advertiser's retail store (an average lift of 17%). Just some stats to keep in mind.

Mich
http://tinyurl.com/ppcoptimizetools

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By websthatwork | Beverly Hills, CA August 7, 2009 10:50:16 pm:

In SEM, the validity of the model always boils doing to a bigger picture set of metrics.

These metrics are based on conversions rates at several key milestone points through the sales funnel.

CTR off the ad, be it text, image or search is just one of the important rates to consider along with particularly the conversion rate of the sales page of promotional piece.

Peter
http://www.businessclicks.com.au/blog/seo-consultant-brisbane/seo-agency-brisbane

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By asouter1 | Cheltenham, FL August 13, 2009 02:14:31 pm:

In these days of credit crunch ROI is everything for the advertiser and you have to have some way of measuring the efficacy of your advertising revenue. PPC has been so successful for the major search engines because it does just that. PPV and other means of paying for advertising is all very well but how am I going to effectively measure my return? Until someone comes up with a better way of metricating conversion rates I think most small budget advertisers are going to stick with the PPC option.

http://is.gd/2ftZW

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By gmiddleton | Indiana, PA August 17, 2009 11:41:54 am:

With the Internet being less than two decades young in age, I believe it's hard to justify the "wrong metric" vs. the "right metric". In a sense it's a case of "to each their own". What may work for one individual or company, may of course not work for another. I personally like the click metric, because I can easily and quickly tell what methods I'm trying are worth pursuing or not. Although I think display advertising is a great method as well, I find it to be more expensive and not as good as measures of ROI, at least from the get go. By using the click metric on the other hand, I can accurately detect my ROI in a matter of a couple of days, or hours for that matter.

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By gmiddleton | Indiana, PA August 17, 2009 11:44:21 am:

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By shmitche | tampa, FL August 21, 2009 03:41:49 pm:

Click metric is great, don't get me wrong. But at the same time people or should I say advertisers are beginning to see past the myth of display ads being worthless because they are not being clicked on. See click ads have a quick benefit for measurement but display ads for BRAND advertisers especially have been shown to affect search for up to 4 weeks after exposure. A whopping 30% of viewers actually visited sites a month after viewing!

Mitch
http://buycontemporaryfireplace.com

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By michael9549 | Roseville, CA August 21, 2009 07:36:10 pm:

Well,for many online advertisers, trading and evaluating Paid search Online classified advertising via major search engines. Effective way to link with potential customers at the time they are seeking product information. marketing (PPCPay Per Click. Results based online trading currency where charges are made for click responses rather than impressions (see CPM).) has now moved beyond paying for clicks. More advanced search marketing campaigns are traded and evaluated on cost per "action" - i.e. paying for a marketing outcome; the generation of a lead, subscription or sale for example. Even more advanced campaigns are evaluated using Return on Investment (ROIReturn On Investment. Measure of sales revenue or profit generated by a campaign expressed as a ratio to the cost of running the campaign.) metrics where search engine marketing activity is optimised around the relationship between online spend and revenue generated. ROIReturn On Investment. Measure of sales revenue or profit generated by a campaign expressed as a ratio to the cost of running the campaign. evaluation can be a very powerful way to evaluate Paid searchOnline classified advertising via major search engines. Effective way to link with potential customers at the time they are seeking product information., but it is not without its own pitfalls. You need to be careful about which ROIReturn On Investment. Measure of sales revenue or profit generated by a campaign expressed as a ratio to the cost of running the campaign. metrics you work with - pick the wrong ones and your best endeavours may still end up generating high volumes of low profit business.

http://www.mypsychicdevelopment.com/psychic/beginners-guide-to-developing-your-psychic-abilities

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By kablyden | Huntersville, NC August 24, 2009 04:54:24 pm:

There are many different things that influence buying behavior. You can not nail it down to one item. That is why analytics are so important in the final equation. Who/what is your target audience? Where do they hang out online? What range online stimuli will cause this audience of consumers to take the desired action? How does the interaction of these various online stimuli positively or negatively affect the propensity of a consumer to take the desired action? How much exposure do they need before taking action? etc... etc... These are questions that Data gathering and analytics can answer for you.Then you can use modeling to laser target your advertising efforts.

Kirschan
http://www.fdiinsider.com

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By shmitche | tampa, FL September 2, 2009 11:00:54 am:

Which was pretty much my point from the beginning. The two metrics (click and display) are very effective each in it's own right, it really just depends on the advertisers particular goal. However, michael9549 brought up a good point about the "cost per acquisition" model. While this model can make middle advertisers like affiliates very rich it really shines for the main advertiser who only has to pay for the results that they have already researched to be most useful to their business. In this particular model it's the CPA company who takes most of the risk.

Mitch
http://www.workathome-workfromhome.com

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By websmart | Stone Mountain, GA September 13, 2009 06:10:53 pm:

I would have to agree with the previous commenter (Andrew) with the fact that if you you don't have a reliable accurate system of tracking prior to the last click, we are just indulging in a theoretical discussion here. Abbey, the original writer of this post, is 100% correct in her analysis. But there does not appear to be a simple and effective solution to the dilemma.

Ed
http://www.razore200.com/kids-electric-scooters/childrens-scooters

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By promotion123 | Arana HIills September 28, 2009 09:36:11 am:

Obviously the 'last click' metric isn't perfect, but there needs to be some metric for gauging ROI and it would appear that, for now, 'last click' is the best on offer. One of many things the 'last click' metric disregards is brand building. Who can say what effect repetitive ad viewings (but not click-ings) have for a brand in the long run?

Maybe statistical analysis will some day need to be employed in much the same way it is for radio and TV. I realize cutting edge means not wanting to fall back on the old ways, but until iris tracking comes built in to your promotional Ogilvy & Mathers web-cam, it looks as if some mathematical guesswork will still need to be involved.

Douglas Gregory
http://www.promotionproducts.com.au

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By cityslick | Houston, TX October 29, 2009 09:09:55 am:

Everybody talks about the weather but nobody does anything about it....

Seriously, what other solution is there on offer to replace the last click. It seems as though we are stuck with it as a success metric. The only other option is just widespread saturation advertising with the intention of hitting every eyeball on every page, and we all know that's not gonna fly.

Henal
http://www.cityslick.net/

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By brian292929 | Portland, OR December 2, 2009 10:49:15 am:

I still think click is a good metric, but if somebody comes along with a clear cut better metric, I would take it seriously and consider that option.

Brian
http://www.whitenightstands.net

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By michael9549 | Roseville, CA December 13, 2009 06:24:34 pm:

I think it's all about testing. Of course the click is going to help us with that. Putting ads in various places and on various sites using analytics to decide what's working and what's not. Then poor the advertising dollars into the things that work and drop the things that don't! The key is always testing!

Michael
http://www.youtube.com/watch?v=hTwz5__-5S4

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By AidanJ | Sydney, NS December 29, 2009 02:52:19 am:

Just came across this article now while looking for some ROI concepts.

Last click is a poor standard but I don't know how to improve upon it meaningfully. I guess the measurement of ROI is always going to be bit rubbery and yes I agree too with the comment re repeat exposure to brand above.

http://adsurf.com.au/2009/11/simple-seo-tips/

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By KIRSCHAN | HUNTERSVILLE, NC January 10, 2010 09:59:18 pm:

seems to me that there needs to be better ways to track a consumers online behavior and how their interaction of various adds on various sites influence their browsing behavior. Did a display ad cause them to look further in the search engine for similar items? what about the affect on branding/ brand awareness of your name/products in the consumers mind... Could online surveys coupled with online exposure tracking get you answers here..

... and how does online privacy regulations impact your ability to collect data... offline it is vary well defined but online it is still a work in progress...

It is great that the discussion is out there and the possibilities are promising but there seems to be still a long way to go to get to the right answer

Kirschan
http://kirschanblyden.com

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By jkrawl | Chicago, IL January 23, 2010 02:05:42 pm:

I just read a decent report that talks about the best metric for online display ads. Now I still believe that the best metric is the click, due to it giving you something that you can easily monitor and control. But this report that I read stated that the best metric to really determine the benefit and value of an online display ad campaign is by observing the EPM( or earning per thousand impressions). You can then break this metric down to figure out your earnings per one impression.

I just thought that I should mention this because when it comes to doing display ads, you are paying mostly for impressions and not clicks. So figuring your EPM would be a good metric to go by.

Frank
http://www.gettingbackyourex.com

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By novels76 | Indi, PA February 2, 2010 04:08:39 pm:

Although I believe display advertising is a valid method also, I find it to be more expensive and not as good of a measure of ROI, at least from the get go. By using the click metric on the other hand, I can accurately discover my ROI in a matter of a couple of days.

Sim
http://www.Innovative-Enclosures.com

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