The Innovative Marketer's Blog

Why Click-Through Rate (CTR) is a Useless Marketing Metric

Larry Jefski
Posted by Larry Jefski on Nov 4, 2014 7:30:00 AM

CTR-Click-Through-Rate

 

When I worked for a large digital advertising company, the gold standard on which we judged our clients’ campaigns was the click-through rate, CTR for short.

“How is the CTR on that new campaign doing?” was always the first question I was asked in the morning, even before I managed to grab my first cup of coffee.

I couldn’t help but wonder what became of the people who clicked on our display ads. Were they really influencing our clients’ bottom line? At times I began to feel a bit guilty.

My concern was often vindicated at the end of campaigns when we would ask clients to extend their budgets with us or start a new contract. A confused client may have seen great CTR only to find that sales or conversions just weren’t increasing on their end.

We would counter this concern by showing that these clicks, though they weren’t leading to sales, were actually a great success – when compared to industry standards. While no “official” industry average exists, Google considers their “industry standard” CTR for online advertising to be somewhere around 0.1 percent. If that weren’t bad enough, comScore reports that only eight percent of users account for eighty-five percent of all clicks.

I know this data is a couple years old, but with the average Internet user being bombarded by more and more display ads every day, ad fatigue inevitably sets in; so I can’t help but assume that those numbers haven’t gotten any better.

 

Click, yes, but who is clicking?     

                                                                                            

The rational for using CTR as a marketing metric is that the simple action of clicking seems easy to understand. If people like what they see, they will be inclined to click—or so the thinking goes, anyway. But, in actuality, many factors play a role in how an ad performs. Results can change based variables like the size of the ad, its placement on the page, any geographic or demographic targeting, the time of day, frequency, and, perhaps most importantly, the relevance of the content on which the ad appeared.

Part of my job as an ad account manager was making tweaks to these variables to get the highest CTR possible. But, as an agency, while we could increase clicks, we just didn’t have the communication with clients to find out if these clicks were strong leads or duds. We didn’t even know if they were coming from human beings.

Therein lays my biggest problem with CTR metrics: not being able to know if the click came from a human, a bot, or if it was just a total mistake. Ever see a heat map of a mobile advertising campaign? It can actually be embarrassing. Overwhelmingly the “clicks” end up being people trying to hit the big red ‘X’ in the top corner to close the ad, but their thumb landed just a few millimeters away. It’s so bad that, according to a recent “fat finger report,” roughly 50 percent of all mobile clicks are due to this phenomenon. How’s that for a quality paid lead?

 

So what now?

 

If CTR is not the ideal metric, what should we, as marketers, be looking at to judge the real success of our campaigns?

 

earnings-and-roi-tom-cruise

 

Earnings, of course!

 

I find it curious that in almost every other business field success is gauged by how much you add to the bottom line. How is it that we have gotten so far away from this in marketing and advertising? While everyone else talks about dollars and cents, we’re still talking about impressions and interaction rates.

It wasn’t always like this. Advertising icon David Ogilvy was a huge proponent of not only tracking data and doing diligent research, but of getting results. Coming from a sales background, he understood that a campaign should not be judged by the awards it won or the number of people who saw it, but on how much it increased actual sales for the client. This should ring especially true in today’s business environment, when you are either adding to the bottom line or you are considered a cost.

Sure, a high CTR is great, but it won’t do you much good when your director points out you spent half your yearly budget on a new PPC campaign, but have few, if any, actual sales to show for it.

I think far too many marketers have fallen into the “pay for performance” trap without stopping to realize that it doesn’t always make fiscal sense. Think about it this way, successful marketers get the best results not by chasing interaction rates, but instead by tracking the actual return on investment of each of their marketing tactics. To familiarize yourself with ROI, why you should be tracking it, and the perils of not doing so, check out The Curse of the Unmeasured ROI, by Danielle Winkler. It’s a great introduction to the topic.

Let’s take a page from Ogilvy and change the conversation back into one about creating leads and actual sales conversions. By shifting the talk away from CTR and adopting ROI as our key performance indicator, we no longer have any excuses not to produce bankable value for our company or brand when the tools to track these metrics are at our fingertips and allow us to quickly correlate our successes with our efforts and our failures with our mistakes.

I hope you enjoyed this post, and as always if you have any questions, comments, concerns, or updated statistics feel free to reach out to me on LinkedIn, or even better yet, use the comment section below!

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