Yet Another Sign That the PPC Model Sucks

If you’re using CTR (click-through rate) as a metric for evaluating the performance of your ad campaigns, you might want to rethink that strategy.

A recent study of 100 million anonymous users and 1 billion ad impressions has shown that only a small percentage of people actually click on ads and those that do are primarily low-income Internet newbies. It also found that 99% of stable cookies showed “no evidence of clicks,” indicating that only a small percentage of online users actually click on ads.

Other interesting findings from the study include:

  • Users who have clicked ads in the past are twice as likely to click again in the future
  • Online gamers click 43% more than non-gamers
  • Users of mobile devices click 123% more often
  • Users with annual incomes of less than $40K click 30% more often than those with incomes over $200K
  • Users with “fair” credit scores click 20% more than those with “excellent” credit scores
  • Late adopters of new technology (newbies)  clicked 50% more often than early adopters (tech weenies)
  • Users who frequently buy online click 65% less than those who are “economizing”

Are these the people you’re targeting with your ad campaigns? Low-income newbies with crappy credit who like to click on ads but don’t buy much? I didn’t think so.

It’s plain that a lot of ad clicks are purely unintentional.  The same study found that 20% of the ads that did show any activity were clicked twice in one impression.  The higher percentage of mobile ad CTRs also indicates to me that the size of the screen may cause inadvertent clicks.  It’s likely the gamers are not clicking on purpose, either.

The last ad that I can remember clicking on was probably a banner ad at the top of the IMDb home page.  I was trying to get my cursor into the search box, but once the large image finally loaded it moved the search box down and my click registered on the ad instead.  My guess is that banner advertisers on IMDb get incredible CTRs but terrible conversions.

Jeremy Stanley, VP of Analytics for Collective (the group who conducted the study), suggests that marketers should not only disregard CTR as a performance metric, they should stop tracking it altogether.  He cautions that campaigns optimized to perform on CTR may actually be destroying brand value.


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