The advertising industry is undergoing a massive shift in how its dollars are spent. Money is moving from the offline world to the online world at a rate of roughly $3 to $5 billion a year.
However, in that rapid shift of spend, a major mistake has been made. Almost all marketers are guilty of it, and it is costing them more than $1 billion a year as time goes on.
Most online advertising networks and websites that are delivering ads have a very simple goal: launch a campaign based on the advertiser's requirements and improve the campaign over time based on where they find success.
The goal of the delivery team (or optimization engine if a technology is being used) is to improve the marketer's metrics by employing tactics such as geotargeting, demographic targeting, time of day, frequency capping, etc.
Ideally, a campaign starts with a certain baseline that improves over time as the network, site, or demand-side platform (DSP) optimizes the campaign.
If a campaign is being measured to an action—let's say a purchase—a network can analyze results, see where it is best achieving success, and improve the campaign metrics and return on investment over time.
If a campaign is being measured to clicks, then over time the click-through rate (CTR), or number of times an ad is clicked per impression, should increase.
Although most campaigns are looking to drive conversion goals, many still use the click and CTR as their primary metrics, because those metrics traditionally have been used to measure success and because they're easy to measure.
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