DoubleClick Thinks Click Rate Increase Is Temporary

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Click-through rates for online ads rose in the first quarter, according to DoubleClick's quarterly survey of Internet ad trends, but the increase could be short-lived.


The New York Internet ad server said yesterday that the click-through rate for all ads it served in the first quarter was 0.56 percent, up from 0.44 percent in the previous quarter. The quarterly increase stopped a long decline in click-through rates.


The rise resulted mainly from more advertisers turning to rich media, animated ads that sometimes move across a user's screen. Though considered mostly a branding medium, rich media's click rate for the quarter was 0.98 percent compared with 0.25 percent for static ads, DoubleClick said.


But the higher click rate probably won't last. The report traced a steady decline in click-through rates for rich media ads in the past four quarters, from 2.2 percent in last year's first quarter to under 1 percent this past quarter. Thanks to rich media volume increasing 50 percent, it lifted overall click rates even while its ads generated fewer clicks.


"We all know that when banners were introduced they had outrageous response rates," said Kathryn Koegel, director of research and industry development. "Part of the novelty is wearing off."


View-through rates -- which assess some action taken by a user within 30 days of viewing an ad -- for all advertiser-served units fell sharply to 0.59 percent from 0.75 percent in the fourth quarter.


Response rates are lower in the United States. DoubleClick said click-through rates in Europe and Asia average better than 1 percent, and they have increased 27 percent over the previous year.


Compared with static ads, rich media units produced twice as much post-impression activity but the same sales, Koegel said.


She said the trend of declining response rates comes from the greatly increased volume of ads DoubleClick served and from more advertisers using the Internet for branding. DoubleClick said it served 231.9 billion ads in the quarter, up 14 percent from the previous quarter. Meanwhile, rich media, more often associated with branding, accounted for 42 percent of the ads DoubleClick served in the quarter, an increase from 40 percent last quarter.


The increase of rich media ads, however, comes as advertisers have returned to the Internet for direct response deals, thanks to the strong growth of paid search. Data released by the Interactive Advertising Bureau last month showed that more spending has shifted to ad deals that pay on a performance basis instead of for impressions. The IAB said performance deals rose to 37 percent of spending in 2003 from 21 percent a year earlier.


DoubleClick reported that rich media ads served by its Motif platform were interacted with, on average, 18.4 percent of the time. The average interaction time was 30 seconds. Interactions tracked include clicking to access further content, mousing over the ad unit or playing a game. Users clicking to close the ad also counted as an interaction.


"The issue is whether that is a positive or a negative thing," Koegel said of closing the ad. "If the person closed the window, they must have noticed the ad in some way."


DoubleClick's rich media tracking system does not differentiate among the interactions, she said.


DoubleClick plans to release a campaign-based study this summer that tracks whether interactions like a user playing a game with an ad have an effect on branding or conversion rates.


Of the leading ad units, the 728x90 pixels banner had the highest click-through rate at 0.86 percent. The standard 468x60 pixels banner, which accounted for one-third of all ads served, elicited a 0.35 percent click-through rate.


The square pop-up unit was No. 2 in click rates at 0.73 percent. The typical 250x250 pixels unit, despite widespread consumer complaints, has remained a leading direct response unit. Last quarter, its 0.75 percent click rate led all units.


Despite the high response rate, DoubleClick said pop-ups lost ground over the year, with use declining 10 percent.


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