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December 26, 2010

Online Display Advertising: Top 5 Reasons Why The Click is Over

One of online marketers’ simplest metrics and a key challenge to keep track of, is  the clickthrough rate. While there are a lot of  debate on whether its just the CTR that matters... and whether that should be a standard metric  of  judging the " results and effectiveness of the campaign

The importance given to the CTR .. is  primarily due  to "  the fact that apart from the CTR model, there has been no unamity on  just " how to judge the  metrics" of an online ads . While the CPM model ensured that " advertisers bombard users with their banners ...the CPC model recognized that  a click  leads to a action which may or may not convert. A high CTR rate does not guarantee a high conversion .. which means that "even a click to the landing page  of the advertisers which does not convert is actually wasted clicks which is again equal to users not clicking at all . 

However the fact of the matter is that the CTR ( click through rates ) has been in decline for years. As many recognize the importance of other measures in determining the success of online campaigns in attempts to capture the branding as well as the direct-response effects of advertisements, fewer and fewer web users were clicking on fewer and fewer ads.

Based on longitudinal data from digital ad solutions provider MediaMind, however, that decline appears to have stopped. The company’s analysis of data from July 2006 through July 2010 shows that annual average click rates have plateaued, at 0.09%.

According to “Standard Banners—Non-Standard Results,” it was the success of online display ads that caused the drop in clicks to begin with. As users saw more and more ads across the internet, many continued clicking, but not fast enough to keep up with the expanding inventory. Clickthrough rates fell steadily until reaching an equilibrium.

The study also provides further evidence to back up brand marketers who want to measure more than just clicks to determine the effects of their campaigns. Just 20.4% of conversions came after clicking on a banner ad. Instead, the vast majority happened among web users who had seen the ad but not clicked on it, and who converted at a later date.

The new findings are an encouraging sign for advertisers,” said Gal Trifon, CEO and co-founder at MediaMind, in a statement. “Although CTR is only a partial measure of online success, the leveling of CTR shows that online advertising has reached a level of maturity and that advertisers have become more sophisticated in luring users’ interest.