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How to Avoid Online Advertising's $1 Billion Mistake

by Russell Glass  |  
October 26, 2010
  |  5,453 views

In this article, learn how to...

  • Measure beyond the click and CTR to drive success
  • Determine the right metric for your campaign
  • Focus on conversions

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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Russell Glass is a co-founder and the CEO of (Bizo), a B2B-audience-targeting platform and advertising network.

LinkedIn: Russell Glass

Twitter: @glassruss

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Comments

  • by Pam Alvord Wed Oct 27, 2010 via web

    Great post that clearly illustrates the challenges of accountability and measurement facing marketers today. We at Kilgannon have recently been blogging about similar issues:

    - When CPC and CPM Meet: http://bit.ly/aMxJeF
    - Drowning in Data: http://bit.ly/9qqCkQ

    So many marketers seem to be on a quest to have numbers to rationalize their investments. But if we don't truly understand what the numbers mean, have we really moved forward?

    --pam

    http://kilgannonsays.wordpress.com
    www.kilgannon.com
    http://twitter.com/KilgannonSays

  • by Dan Soschin Thu Oct 28, 2010 via web

    Agreed! CTR is only useful from a branding perspective... We rarely use it as a measure of success. Any vendor that is trying to sell you ads based upon their "historical" CTR hasn't kept up with the times. Conversion rate is by far and away how you should measure your advertising effectiveness. After all, you want new customers, not window shoppers, right?

  • by Eric Brown Fri Oct 29, 2010 via web

    We are all for measuring advertising's impact on consumer behavior especially outside of the click. Great to see others taking a stance.

    http://www.mobilemarketer.com/cms/opinion/columns/7044.html
    http://www.mobilemarketer.com/cms/opinion/columns/7367.html

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