A report released Monday by AdKnowledge, a Palo Alto, California-based Internet marketing analyst, suggests that online advertisers who concentrate too heavily on click rates are "missing the bigger picture."
The Q2 Online Advertising Report (OAR), a compilation of Web advertising statistics and trend analyses gathered from the AdKnowledge System and analyzed by the new AdKnowledge eAnalytics division, suggests that click rates have little value as indicators for return on investment (ROI) optimization because their correlation to conversion rates is so low.
"There has been a lot of talk lately about declining click rates," AdKnowledge Vice President
Steve Findley said. "This new data proves that Web advertisers who are just looking at click rates are missing the bigger picture. The Web is fast becoming a more sophisticated advertising medium. Because it's so measurable, data mining will be increasingly used by smart marketers to optimize current campaigns and point the way towards more efficient campaigns in the future. Our customers already are taking advantage of this capability in AdKnowledge's new eAnalytics and DataDNA services."
According to the report, only 14.3 percent of the time is the ad with the highest click rate in a campaign also the ad with the highest conversion rate. In other words, the fact that people are clicking through doesn't mean that their forking over the dough.
Other data shows that when selecting the best Web sites for a campaign based on click rates and not conversion rates, there is a 50/50 chance of choosing incorrectly. "Leaving that much to chance is simply unacceptable in Web marketing today," said Findley.
The report also found the following:
- At the end of March, the Web included a total of 1,815 sites and networks that accepted advertising, by the end of June, the number had risen to 2,111 (an increase of 16.3 percent).
- Online advertising rates declined by 2.1 percent for the second quarter. In the first quarter, average CPM cost was $34.96, while the average CPM cost in the second quarter was $34.23. The first quarter decline rate was .5 percent.
- All rich media formats experienced double-digit growth this quarter, as the number of sites accepting rich media ads continues to increase.
AdKnowledge uses a data warehouse to supply information from the OAR to marketers and agencies to help them optimize their Web advertising campaigns. The report is a compilation of Web advertising statistics analyzed by AdKnowledge eAnalytics, which provides a new level of insight into online brand awareness and purchase behavior. The information is gathered from the AdKnowledge System, which includes four components that span planning; campaign buying and trafficking; ad serving and targeting; and reporting.
The AdKnowledge System's database contains more than 2,100 Web sites, which, according to Nielsen//NetRatings, reaches over 94.1 percent of the overall Web audience. The full OAR is available at http://www.adknowledge.com/oar_2ndqtr99.pdf