Is the click-through rate a dead metric?
The gloves are off
The click-through rate is a dead metric primarily because it has historically been used by marketers and their agencies as a proxy for measuring purchase or conversion intent. The simple fact is that it no longer accurately serves that purpose.
Three factors have contributed to this new reality. For one, marketers are using more channels to market their products, creating more touch points with consumers than ever before.
Consumer behavior has also changed. Consumers absorb these multiple touches across all channels as one holistic brand experience and make no distinction about receiving messaging on one channel while communicating back in another. They see a display ad or social media content and execute a search as a result.
Through the use of new measurement technologies, marketers can now accurately track, measure and analyze this entire brand experience that they create with consumers. The output of that attribution process is an understanding of the extent to which each touch point really influenced conversions. A "proxy" for purchase intent is no longer needed, because attribution can provide the "reality" of purchase intent.
When using the antiquated "last click" method for measuring channel, campaign or tactic performance, it made sense to use click-through rates and revenue per click to measure success because those were the only metrics available when looking at that single, last touch point.
What's discovered when this marketing science is applied to the entire marketing experience — and of course, it varies campaign to campaign — is that significant credit for conversions is often earned by impressions of display ads, emails and social media content, among others categories. The proof exists, though the click-through rate on search remains strong, in that the number of click-through conversions has remained flat or declined. However, the number of view-through conversions, representing those recorded through one channel after exposure to impressions of another, has grown rapidly in most marketers' portfolios.
The click-through rate is dead, replaced by attribution metrics across the entire marketing experience.
Google reported first-quarter revenues of $8.6 billion, a 27% increase compared with the same period in 2010. Google's total traffic acquisition costs (TAC) in the first quarter of 2011 was $2 billion, which was 25% of advertising revenue.
Google's revenue is generated by advertising and Google AdWords, which contributes most of its revenue. Specifically, aggregated paid clicks, which includes clicks related to advertisements served on Google's website and the site of its AdSense partners, increased 18% this year. Google earned $8.3 billion in revenue in the first quarter, a 28% increase compared with the prior year, and its net income also grew 17% year-over-year to $2.3 billion.
The company's click-through rates are continually increasing and are a key component of Google's expanding revenue stream, as supported by its earnings.
Click-through rates are essential for both branding and engagement marketing because they quantify how the advertising in question pulls from the network being used to find out more about a targeted product or service. An advertiser — looking for sales, leads, downloads or whatever their particular objective is — can glean more information from these monitored click-through rates. These measurements serve as a conversion piece with website visitors.
Click-through rates also continue to be the most commonly used metric by online advertisers. It is the key diagnostic measurement tool for determining the success of advertising strategies. However, it is not the only tool used.
Although click-through rates have fallen through the years as online advertising has proliferated, it has also given insight to poorly defined, targeted and executed campaigns and strategies. This insight has contributed to the overall rate decline. Campaigns that are highly creative, innovative and are executed through channels that are relevant to each targeted audience are able to enjoy higher click-through rates than the overall average.
Direct Marketing News Decision
Click-through rates are certainly not dead. As long as Internet advertising giants like Google continue to use the metric to influence their strategies, click-through rates will continue to play an important role for companies looking to measure the success of their online advertising buys and campaigns.