Spectacular Click Through Rate

6944552233_fe4b6b9606_kAs the internet has been growing exponentially over the past 20 years, online advertising has become very big business. Most of it in the form of online bannering: various sizes of squares and rectangles with commerical messages, spread across webpages (usually at more or less fixed parts of the page layout, such as the area in the top middle of the page).

To the companies spending money on advertising, this form of online advertising was presented as very interesting because you can very easily measure the efficacy: you can count (on the website where the banners are displayed) how many times the banner is shown and also (on the website the banner is linking to) how many times the banner is clicked on, so you don’t have to be a mathematical genius to calculate the number known as the click through rate (CTR). This is obviously the number of impressions (the term used in the industry for the times the banner is shown) divided by the number of clicks.

In the early years of the internet, the CTR was indeed quite high for the companies using banners for advertising. According to a statistic mentioned in The Recommender Revolution (the book in itself is also highly recommended!) it was as high as 7% in 1996 (meaning that for every 100 times a banner was shown, 7 times this lead to a click on it). But over the years this has decreased quite dramatically, to currently a mere 0,08% in April 2015 (according to one of the experts in the panel of podcast episode 345 of The Beancast – an excellent source of information on what’s happening and what’s new in marketing, although at times a bit too US-focused to be interesting for a European audience). And if you take into account that clicks from mobile platforms are often unintended clicks (from people who really want to click the X to close an ad, but end up accidentally clicking the ad itself because they are so incredibly small on the tiny screen of some mobile devices), the real number might even be lower.

There are two main reasons for this spectacular decrease: the sheer number of websites with advertising on them has grown so dramatically that any surfer is simply being banner-bombarded these days. And, perhaps even more important, we have all collectively learned to simply ignore the places where those online ads are traditionally placed on websites (top middle, column at the right, etc.).

Sounds pretty depressing for the people who’s job depends on things such as CTR, right? But it’s not all bad news. There’s a new form of online ads that is getting a massive number of clicks. You will usually encounter it on platforms such as YouTube, inside the ad that is automatically starting as a so called pre-roll before you’re allowed to watch the video you want to watch: it’s the button that says ‘Skip Ad’ – I haven’t found any actual number on the CTR of those, but I would not be surprised if it turns out to be well over 90%.

The point I want to make here, is the one Howard Gossage so eloquently phrased: “People don’t read advertising. They read what they are interested in. And sometimes it happens to be ads.” (In this case perhaps to be paraphrased as “People don’t click banner ads. They click what they are interested in. And sometimes it happens to be ads.”)

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