Online retailers have naturally migrated to the digital landscape where their business functions serve as a way to engage with potential customers. However, despite a symbiosis between digital advertising and digital businesses, many e-commerce companies often struggle to derive a meaningful return on their digital advertising investment. Much of this disappointment is rooted in the measurement system, which often tracks metrics counterintuitive to the objective of the campaign.
Measuring a campaign appropriately is the most important consideration for online media. For online retailers in particular, measurement methods can make or break a campaign. To accurately measure a campaign, retailers must identify the true business objective, and then measure against that objective. Objectives, execution, measurement and results weave an intricate web of interdependent pieces in a digital campaign. Ad types (e.g., banners vs. interstitials) and optimization tactics (optimize toward people who convert vs. people who click) will vary greatly depending on the objective of the campaign. If, for example, the objective is to drive online purchases, using a pixel to measure those purchases (and shopping cart abandons) is imperative to successful optimization.
For many, clickthrough rate (CTR) has remained a steadfast barometer of a digital campaign’s success. Unfortunately, using CTR or clicks as a proxy for success is a mistake, particularly because most consumers never click on online ads. Oftentimes, click rates are so low that if a banner campaign generates one click out of every 1,000 views (translating to a .1 percent CTR), that “result” is often considered a success.
Not only is CTR a poor measure for success, but it’s also, frankly, a dangerous objective. When CTR is the goal, the campaign will be optimized toward “clickers.” The result is a campaign that targets the wrong consumer. The profile of those who click on an ad is very different from those who purchase online. Using CTR to gauge the success of a campaign, therefore, isn’t relevant and, moreover, positions digital campaigns for failure.
Instead, e-commerce retailers should focus on measuring other criteria. Assessing purchases, lifetime value of a customer and true return on investment are among the best measurements. If you’re unable to accurately measure against these metrics, there are additional options worth strong consideration as alternatives to CTR.
One alternative is measuring and optimizing toward consumers that have viewed your ad and returned later to your website. This may be referred to as a “look back,” “view through” or “post-view activity.” Tracking this metric provides a clearer picture of those impacted by your ad and is much more valuable than simply knowing if a potential customer clicked on your ad. This nuanced difference is important because most consumers (and therefore most of your customers) won’t click on an ad as soon as they see it. Those intending to purchase may instead view the ad and return to your site at a later time to purchase the advertised item. If you were only tracking CTR, as opposed to post-view activity, the numbers would paint the campaign a failure.
Other alternatives to consider are store-locator buttons (which infer intent to visit), coupon downloads (which infer intent to purchase) and brand-lift studies that measure intent to purchase. Additionally, store visitation lift studies that use mobile advertising to measure lift in in-store visits can be an effective tool. Deciding which measurement to use will ultimately come down to the objective. Is it a particular product you’re trying to move or just product in general? Is there a sales number you need to hit? Or are you looking to move the needle on your brand’s favorability?
The digital landscape has not only provided retailers with a medium to sell products, but an avenue to engage with customers. Succeeding in such endeavors is ultimately dependent on how the results are measured and optimized. Internet retailers would be wise to consider alternatives to the traditional CTR metric, instead focusing on optimization that achieves the campaign’s objectives. By doing so, they’ll not only generate more impactful results from their digital ad spend, but will ultimately be enabled to design campaigns that drive maximum ROI.