Volume 1, Issue 3 - April, 2011
Editor, IQ Advisor
For interactive marketers raised on a steady diet of paid search marketing, calculating your conversion rate as Total Conversions / Total Clicks is second nature. This is a very natural and understandable thing to do, mostly because you paid for the click. However, this presumes that there is a very tight marketing funnel where every user who converted clicked first and every user who clicked searched before that.
Though there are some nuances regarding keywords that provide assists to conversion, this assumption is not entirely unreasonable if you have invested only in search. However, when it comes to online display advertising the funnel doesn’t manifest itself in the same way. The user who eventually converts via display doesn’t need to have clicked first. In fact, for many brands we have found that users who click on display ads may not be “the converting type.”
For example, look at the conversion rate against clicks for the financial services client whose performance is depicted in the slide below. It looks like display outperforms search almost by 11x in conversion efficiency.
However, when we look at the entire history of users who converted (see the two charts below), we find that converters hardly ever clicked on display ad, meaning that most of the clicks came from users who did not convert. And most of display’s conversions came as via view-through (impressions) as opposed to click-through actions.
In other words, as an indicator of conversion intent clicks do not apply for online display as they do for search.
If you think about it, this actually isn’t very surprising. Today, the online audience is not dominated by kids who are just playing video games. Rather, it is a fairly accurate representation of the overall population in general. So just as it would be unreasonable to assume that someone would walk into their neighborhood store and buy a 6-pack when they see a Budweiser ad on TV, it should be unreasonable to assume that online users are going to disrupt their current browsing experience by clicking on an ad to check out what you have to sell, even if it very relevant to their lives in general.
What we have found is that users search for your brand (or whatever proxy keyword they can remember for that brand) and navigate to your site at a time of their choosing, rather than at a time when you chose to put an ad in front of them. However, it is reasonable to assume that their preferences will shift if exposed to your display ad, and they will be more amenable to searching for your brand rather than your competitor’s when the time comes to launch their search.
The key is to analyze the entire user experience, rather than the last touch. And understand the efficacy of the channel mix rather than just channel silos. For the same financial services client referenced in the charts above, when we looked at the efficiency of the channel mix, what we found display and search working together chart (see below).
So remember, a click is not a click is not a click - until you’ve look at the channel from which it originated.
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