September 2016
Volume 7, Issue 9

Beyond the Click

The world of next-generation online advertising

By Terry Fine

If you’ve done any online marketing, you have undoubtedly paid attention to your ads’ click rates. And why not? The internet’s interactivity and tracking capabilities made monitoring click rates—and the resulting ROI statistics they generate—the bedrock upon which most online marketing campaigns have been built for the past 15 years. It’s a handy metric, but online marketers’ obsession with click-through rates (CTRs) has been selling the web’s marketing potential short. It’s time to reconfigure your outlook on web advertising.

The good news? You have a lot more paths to a successful digital campaign. The downside? The days of blanket banner purchases are coming to an end, so you’ll need to work harder to develop a cogent strategy.

As an online advertiser, you probably favored a simple price-per-click (PPC) model of advertising: You agree to pay a fixed amount each time an end user clicks on your banner. Google, Facebook, and many other advertisers favor this model, partially because ROI is easy for advertisers to calculate. Merely calculate the cost of your ad spend versus revenue generated through your website, and you have a ballpark estimate of your return.

That’s still a pretty big ballpark, though. As any old-school marketing professional will tell you, that model ignores a lot of intangibles that aren’t captured in the straight line calculus of click-and-purchase analysis. Most significantly, it overlooks the basic tenet of building a brand. Namely, the more times customers are exposed to your brand, the more value it has. Some publishers recognize this and argue that their responsibility is only to place advertisements in front of their audience; how end users interact with banners is immaterial. In this business model, ad impressions are purchased in bulk. Pricing is based on a cost per thousand (CPM) basis.

Each impression your display or text ad receives has value in that it builds your brand, and intangible ROI is typically greater than mere click-based formulas represent. In 2012, Facebook teamed with Datalogix, a company that tracks purchases in more than 1000 retailers using loyalty programs to study the impact of advertising in its newsfeeds. The results indicated that users who viewed an ad while on Facebook were more likely to purchase the product than those who weren’t, according to the Financial Times. More importantly, every $1 spent on Facebook demonstrably led to an additional $3 in sales in 70% of campaigns. Clearly, brand reinforcement in the online space impacted purchasing decisions—and smart advertisers are looking beyond CTRs.

Retargeting campaigns offer another means to reach customers with a demonstrated interest in your company. Using information from Google Analytics or a similar cookie technology, remarketing allows you to serve ads targeted only to customers who have visited your website. If you have enough traffic on interior pages, you can even drill down and serve ads based on views of specific pages. Although cost per click rates are significantly higher than traditional models, your banner will only be viewed by potential customers, those who previously visited your website, tapping into a prequalified demographic with much more value.

As advertisers have become more sophisticated, so have audiences. In response to pages overloaded with high-bandwidth video ads and scripted ads, many web users have installed ad-blocker software to prevent online advertisements from loading on their devices. While a distaste for receiving advertising motivates some, many simply want to speed load times or conserve data on mobile plans with a data limit. Irrespective of their motivations, 45 million users enabled ad-blocking technology by June 2015, according to Page Fair.

At the moment, ad blocker software is a larger threat to publishers who are serving fewer ads and generating less revenue than it is to advertisers. There is no consensus on how the technology will shake out—some experts point to a rise in native advertising, advertising seamlessly woven into content, while others predict a massive restructuring of free content on the web. Either way, today’s advertisers need to be aware that a shift may be coming. Until it does, many online marketers are viewing ad block technologies as a boon, placing their ads only in front of audiences who aren’t hostile toward digital marketing—a change that can only improve reception of online campaigns.

As online marketing adapts, your strategy must evolve. If you’re still only focusing on CTRs and maximizing CPC returns, you’re leaving a lot of marketing opportunities on the table. In today’s competitive space, can you afford not to make use of every advantage that online marketing provides?

Terry Fine is President of AMG Creative in Fort Collins, Colorado.

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