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Click-Through Rate (CTR) is the long-standing, often-used champion of digital advertising metrics. CTR has shaped how advertisers measure campaign success for over three decades, from its humble beginnings with a pioneering banner to its gradual decline. However, as the industry evolves and faces challenges like ad fraud and bot traffic, advertisers should scrutinize the value of CTR as the ultimate metric.
In this blog post, we delve into the rise of CTR, explore its limitations, and discover the new horizons of data-driven marketing strategies that promise to revolutionize the advertising landscape.
🖱️ What is a Click-Through Rate (CTR)?
Click-Through Rate (CTR) is a digital advertising metric that measures the percentage of users who click on an ad or link compared to the total number of impressions (or ad views). This KPI indicates an advertisement’s effectiveness in driving engagement and directing users to a website.
Have you ever clicked your mouse right HERE? ———–> YOU WILL.
The internet’s first display banner contained the above question and answer. This simple ad achieved a 44% Click-Through Rate. The metric to measure success for online advertising had been set in stone.
Online advertising showcases brand content on a webpage right in front of a prospective customer, with the desire that their message, offer, product, or service will drive that individual to engage with their brand. For nearly 30 years, clicking on a digital creative was used to determine a marketing budget’s value/impact.
✅ What is a good Click-Through Rate?
A good CTR for branded banners is 0.03% to 0.05%. Higher goals (>0.06%) may miss converting customers. The above recommendation is based on 100s of campaigns run for our clients at KORTX. Setting realistic objectives based on ad type, audience, and strategy is important.
The value of CTR as a primary indicator of success has greatly diminished.
This depreciation is due to many factors, including:
Customer engagement with the website, measured by pixels placed on selected site event actions is a superior approach for campaign optimization and analysis of value and impact. Industry research has demonstrated clicks result from bot traffic, rather than genuine customer clicks. This is known as ad fraud.
🤖 ❤️ Did you know bots love AI too?
Digital ad fraud is expected to cost the industry over $100B worldwide in 2023. These losses are expected to increase substantially as bots and fraudsters gain the efficiency of AI tools.
Optimizing CTR can exacerbate this by organically moving delivery to websites that will get clicks but no further action on the website. Inventory that delivers clients’ goals is great, but as programmatic experts, we must explain the complexities of the ecosystem.
🛠️ What measures do you take to combat ad fraud and mitigate the impact of bot traffic on campaign performance? 🛠️
“The best way to reduce the effects of ad fraud is to scrutinize your KPIs. Is a click just a click? Is high viewability impactful for your brand? While advertisers may find these measurements easy to track, they are also easy for fraudsters to mimic. As a campaign manager, I’m typically looking to optimize towards actions that represent moving a customer down a sales funnel or looking at an aggregate of conversions that represent brand engagement. At the same time, it can be more difficult to evaluate and track. Using a more robust KPI logic makes it more difficult for bad actors to mimic, thus, less likely for your traders, campaigns, or algorithms to direct spend.”
Brandon Pollard, Director of Ad Operations, KORTX
The goal is to target people, not places. Optimizing towards a Click-Through Rate goal that can be achieved through delivery on sites built with malicious intent – even with proactive inventory cleanup by an ops team – can negatively impact site conversion rates.
Instead, rely on algorithms that ingest data that is delivering the best site actions from people, not data from a random set of websites that are delivering high rates of clicks with no discernible impact on lower funnel engagements.
👽 KORTX Intelligence: Are you missing valuable customers?
Across industry verticals, KORTX campaigns maintain a 0.03% to 0.05% CTR for branding banners, totaling over 10 billion impressions. Our team has discovered that setting goals higher than 0.06% often misses converting valuable customers.
Furthermore, when KORTX transitions a client from Click-Through Rate to conversions, CTR drops, and conversion rates increase 4-8x. 📊 ✨
Let KORTX help your marketing team evaluate current campaign goals and increase conversions.
We can do the website tagging, reporting, and day-to-day campaign work for you.
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Ditching CTR entirely might not be the best decision for marketers. While it is true that actionable metrics are becoming increasingly important in modern marketing strategies, CTR still holds some value as a performance indicator. For certain brands, CTR can provide insights into the effectiveness of their ad campaigns in generating user engagement and interest. Additionally, CTR is a straightforward metric that is easy to measure and understand, making it accessible to marketers of all levels.
Marketing teams using CTR as a key metric must work to understand the numbers for their brand specifically. Instead of setting goals alongside an industry standard, dive deeper into past and current campaigns to learn what range or CTR percentage drives outcomes for your brand.
It is crucial to recognize the limitations of CTR and not rely solely on this metric to evaluate the overall success of a campaign. Completely ditching CTR might overlook valuable insights that can still be derived from this metric when used with other relevant performance indicators.
Marketing teams can build creatives optimized for clicks or engagements, like interactive rich media, where valuable content and functionality elicit interactive behavior. But most creatives across verticals are static branded messages, and those can lack emotional or financial drivers to make customers engage immediately and comprehensively. Thus, a CTR campaign using a (respectively) simple branding banner will move towards more unsavory bot-filled inventory and away from their most valuable audiences.
📏 Why are alternative KPIs preferable to CTR? 📏
“Just because a person doesn’t click an ad doesn’t mean the ad didn’t do its job. This is why pixels and having a solid tag map on your site are so important – to capture that post-impression attribution from the many users that don’t click ads.”
Jess Ostrom, Director of Account Management, KORTX
📚 Related Article: Moving Beyond Vanity Metrics
New site tagging technology and advanced analytics allow advertisers deep insights into the actions a user takes after being served an ad.
Website engagements feed campaign algorithms the best data. Optimizing campaigns towards Click-Through Rates diminishes the volume of this high-quality data because the algorithm focuses on a different perceived value prop: clicks.
Like any person, company, industry, or society that grows, evolves, and innovates, things that once got the job done, may not be the solution anymore.
Bryan Presti is the Head of Programmatic Buying at KORTX.
More from the Author:
☕️ A Day in the Life at KORTX: Programmatic Operations
🔀 Programmable Splits and Split Assist™: The Winning Combination for Effective Advertising
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