The Hard Truth About CTR
Click-through rate (CTR) is one of the first metrics on the monthly report.
Everyone obsesses over it, wondering why Campaign A is outperforming Campaign B.
But here’s the thing.
It’s actually not that important. Not in the grand scheme of things, anyway.
It does serve a purpose. It can be a helpful leading indicator to watch from time-to-time.
However, prioritizing it over other things can be a massive mistake. And it can backfire if you’re not careful.
Here’s why, and what you should be doing instead.
Why your ad CTR shouldn’t matter
There’s no shortage of metrics online.
Take impressions, for example.
They tell you how many eyeballs your ads or campaigns reached. They tell you the max number of people who were “exposed” to your ad.
And therein lies the problem. What, exactly, does “exposed” mean?
Did they glance at it? Look directly at it? Or did it just show up on their page while they scrolled right past it?
After all, 86% of people don’t look at online ads.
Sure, they might be there. They might be showing up on the page. But that doesn’t mean someone is looking at them. It doesn’t mean they’re going to remember them.
Think about Facebook ads for a second.
They’re often competing against people’s family and friends for attention. Check out the image below and think about where your eyes go first:
I’ll tell you where they don’t go: the ads in the sidebar. Why? Because you go on Facebook to emotionally connect with other people. You want to see what the people you care about are up to.
And yet one study found that “no paid-for ads received any emotional response.” That’s a euphemism for “nobody cared about the ads,” which means people definitely aren’t active looking or remembering them, either.
Today, people are trying to avoid ads altogether. MIT reports that ad blocking technology use has quadrupled in just the past few years.
Why are we going on and on and on about impressions?
Because your advertising CTR is a function of impressions. It’s literally the total impressions divided by the number of clicks.
But as we’re seeing, that first number is literally meaningless. Just because someone is “exposed” to an ad doesn’t mean they’re actually clicking.
Even if they do click, there’s no guarantee that click will stick around. And nothing you can do on the advertising side might save it.
For example, a single second delay in page loading time can decrease conversions by up to 7%!
So your CTR might look great. But if people aren’t sticking around and converting, it doesn’t really make a difference at the end of the day.
The good news is that there are a few better options out there. Start with these three, first.
3 ways to improve ad results without looking at CTR
1. Prioritize better metrics
John Braddock was a spy for the CIA.
And in A Spy’s Guide to Strategy, he recommends you start with the end goal. You start with the objective and then work backward to figure out the result.
For example, your end goal is MQLs. You need a certain number of qualified leads coming in the door each month, so that a certain number of those can be closed into new customers.
Does that mean you should obsessively watch CTR then? No!
That also means benchmarking this data against the competition is useless, too.
Because it doesn’t make sense when you view things in this light. The number of people who are (or aren’t) looking at ads, or the number of times your ads get clicked, have literally nothing to do with the number of qualified people who’re opting-in.
Instead, a much better metric would be Cost Per Lead. Or, better yet, Cost Per Qualified lead.
Because again, you need people who can ultimately buy. (Not just kick the tires.)
A focus on Cost Per Lead changes everything. For example, if you know a closed account is worth $10,000 for you, there’s a chance you might even want to bid up the CPC or intentionally sabotage the CTR in an effort to chase the best Cost Per Lead you can possibly get.
Check out the following graphic from a real client:
The very first row has the lowest CTR, the highest CPC, and yet it also has the most conversions.
Sure, the Cost Per Lead in this case is high, too. However, you again compare that to potential revenue.
If your revenue is 10x the Cost Per Lead and the quality is good… then it’s OK. You can always optimize that over the long haul to incrementally drive down costs.
A third of marketers cite “personalization” as the single most important trend.
However, less than 10% of them think they’re doing a good job.
Why the discrepancy?
Probably because they’re still relying on “Hey $FNAME.” That isn’t personalization. Not today, anyway.
Instead, true personalization goes beyond dropping a name tag into an email or even a single channel.
Here’s a story that illustrates this perfectly.
Salesforce and Facebook teamed up to run an experiment with 565,000 email subscribers.
They split this massive list into three different groups:
- Those that received only an email
- Those that received only an ad
- Those that received both an email and an ad that shared messaging
You can probably already see where this is going. The third group who received both messages were “22% more likely to purchase.”
Remember, our goal here is MQLs and conversions. Not just clicks or CTR.
The results impressed everyone, including Blake Chandlee, Facebook’s VP of Global Partnerships:
“The combination of CRM (customer relationship management) data and Facebook targeting truly powers targeted reach at scale to create effective marketing campaigns. We expect to see great results as marketers continue to pair Facebook custom audiences with both email marketing and direct-mail campaigns.”
Personalization isn’t a name or company tag in an email. It’s tailoring the entire visitor experience, across touchpoints, based on where they are in your buying cycle.
And that extends to advertisements. The ads people see need to be personalized. The creative offer and messaging needs to change based on if they’re a stranger, first-time site visitor, email subscribers, or MQL.
The only way to pull something like that off is with a centralized CRM or lead database.
For example, Brennan Dunn centralizes customer information based on their persona or segment, their size, and also their lead value.
He even has it fleshed out based on the potential products or services they would be most interested in (based on the data they’ve provided and previous behavior).
Think of these data points as variables. One customer might have: A + D + E + S, while another comes out to B + B + F + M.
Those unique formulas should kick off unique offers, campaigns, emails, and of course, ads.
But the problem is that this is difficult to pull off in practice. Most companies don’t even have that level of granularity. How would they be able to fire off different campaigns or sequences automatically like this without intervening?
3. Automate & scale your campaigns
Many marketers see “programmatic ads” as the future of online advertising.
One study says that could account for around $18 billion dollars by 2018, accounting for up to 50% of all digital ad sales.
Programmatic advertising is so promising for two reasons:
- It creates a real-time auction for display and banner ads, similar to how AdWords works.
- But it also allows for greater customization and personalization of those ads that will be shown.
For example, these new ad networks can give you demographic data on who’s reading specific things. They also loop in machine learning to help you better target and tailor ad creative to increase results.
Sounds awesome, right? Pretty promising on the surface.
Except for the fact that many of the largest networks require cost prohibitive buy-ins.
“Between ad-serving and tech-targeting fees, you’re now starting to see more than 50 cents out of every dollar going to nonworking investments and less going to the publisher,” according to the Senior VP of Enterprise Media for Bank of America, Lou Paskalis.
Fortunately, there’s a similar solution already at your fingertips.
For example, Facebook has Dynamic Product Ads. Let’s say someone visits your website, checks out a product, but doesn’t end up pulling the trigger.
You can follow them around with a generic retargeting ad. Or you can use Dynamic Product Ads to automatically serve them retargeting ads with the exact product variation they were just looking at on your website.
First, you create a spreadsheet database for all of your products and their variations. This includes product types, ID, descriptions, colors, and more.
Then, you’ll be able to use a single ad creative template that will automatically pull in this data when someone hits the pixel on your site.
But wait… aren’t these just for mommy blogs and little retail shops? Nope.
Forrester Research predicts that by the year 2020, B2B ecommerce will be worth over a trillion dollars — which is twice the size of B2C!
B2C gets all the attention online. But all the money is in B2B.
It’s one of the fastest growing markets because it lines up with how B2B buyers already shop. It also provides better pricing transparency and more convenience.
The best part of all? Dynamic Product Ads with reviews have 2x higher CTR. So by increasing personalization and automation, first, you’ll increase CTR as a byproduct.
Plus, a whole lot more MQLs on top of it.
There are dozens of metrics you could be tracking.
However, the reality is that many of them can lead you astray.
Sure, CTR is important. But only to a certain point. Taking it too far can actually backfire, resulting in lower total conversions and revenue.
The problem is that doing everything you can to optimize one metric can often lower results in other areas.
Raising CTR at the expense of lowering MQLs? That’s a terrible idea.
The trick is to take a different view. Focus on what’s important, like qualified conversions and the Cost Per Lead.
Then, you can incrementally increase results by improving how your ads are personalized and automated.
That will help you get better results where it matters. Your bottom line will increase.
And if you do it right, even the CTR should start to creep up over time.