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A Primer on Measuring Online Advertising

By Jason Heller

"Not everything that counts can be counted, and not everything that can be counted counts." - Albert Einstein

Yes, the internet provides a level of accountability and measurement like no other medium to-date. However, very often marketers tend to grab onto the wrong, albeit tangible, metrics to evaluate their efforts.

Such has been the case with click rate. I know this is going to sound like a lot to swallow - but get the idea of clicks and click through rate out of your mind as a Key Performance Indicator (KPI). The average response rate online hovers between 0.1% and 0.8%, and studies have proven that over 70% of consumers simply never click at all, even for products that interest them. Click through metrics are never valid metrics to measure the ultimate performance of your online advertising efforts.

That is not to say that click through rate means absolutely nothing - it simply is not a KPI. If you are running a direct response campaign, it certainly is one of the variables that would be monitored and optimized to yield an action oriented KPI (cost per lead, cost per sale, cost per newsletter sign-up etc). But really - is diving a direct response product? Or is diving a higher consideration purchase? Maybe for lower ticket items, you can argue a direct response application. But generally, while there are always those in market ready to buy now - it is the influence that sustained marketing has on the perception and preference for your brand and company, that ultimately yields consumers' decisions to do business with you.

By the way - Search marketing is a very different beast and reaches consumers at the bottom part of the sales funnel. It is efficient and effective as a direct response channel.

Earlier this year, the online advertising industry conducted a study (Natural Born Clickers) to determine just how many people actually click on ads, versus those that simply never click. The study illustrates that heavy clickers represent just 6% of the online population yet account for 50% of all display ad clicks. While many online media companies use click-through rate as an ad negotiation currency, the study shows that heavy clickers are not representative of the general public. In fact, heavy clickers skew towards Internet users between the ages of 25-44 and households with an income under $40,000. Not exactly the diving demographic. "Close to 70 percent of the online universe doesn't click at all," said Greg Rogers, VP at Tacoda.

So what are the other ways to measure online advertising you ask?

- Consumer attitudes and preferences towards your brand (we will get into how to measure this during my 2009 DEMA seminars, and will post the info here afterward)

- Surveys and point-of-sale (POS) tracking

- Your business growing as a result of aggregate marketing investments

Again, although the internet is indeed a measurable medium, it is not black and white. and unless you have the budget for research studies, not absolute. We will continue to discuss methods of tracking how consumers are influenced by your marketing.

Remember - measuring click rates indicates the impact of your adverting on less than 1% of those exposed. Your goal should be to understand how the other 99% have been influenced as well.