A Dated Introduction to Online Marketing*

*Note: This is the original version of a whitepaper that was authored in 2001 by iCondotta's founder and principal consultant, Stephan Aarstol. It's a useful primer, but dated - pre-Wikipedia (2001), pre-Google AdWords PPC (2002), way pre-YouTube (2005), you get the picture...

“Click-thru” and “Click-thru Rate (CTR)”

The term click-thru is describing the event that occurs when a web surfer clicks on a hyperlinked advertisement and is taken to a different place than where they currently are on the web. A common phrase referenced to in the advertising world is the ‘click-thru rate’ or CTR, which is the number of click-thrus an ad receives divided by the number of impressions that same ad gets. The click-thru rate is quantified as a percentage (i.e. of the 30,000 impressions served, our banner generated 150 clickthrus, so our CTR is 0.5%).

The fact that Internet advertising allows advertisers an unparalleled ability to track actionable items resulting from their advertising coupled with the fact that the CTR is easy to calculate and easy to conceptualize, means advertisers have not surprisingly become obsessively focused on their CTR. It’ s common for an advertiser to follow the reasoning that if I paid $10,000 for an online ad on a particular site and received 500 click-thrus, then I’m paying $20 per click-thru, which may or may not sound expensive, depending on your business. So a misguided advertiser’s take away is that click-thrus cost $20 for placements on that site. That’s a gross generalization that will lead to bad decisions. No one can argue that CTR is a valuable metric in determining the relative success of creative and the appropriateness of the placement for any given campaign, but it is important to understand that it is only one of the many gauges of a campaign’s success. Additionally, there are many factors that go into the CTR, many that advertisers themselves largely control.

To illustrate the many factors involved with CTR, consider an advertiser that approaches a company publishing an email newsletter to 40,000 local business leaders twice a month, of which 50% of them typically open the newsletter. The advertiser wants to advertise in the newsletter, so they ask to place their logo in the newsletter and have it hyperlink back to the advertiser’s website. The two parties agree to a price of $6000 for a 3 month placement.

After one month, the advertiser calls to complain that they’re only got 20 click-thrus, which they feel is a pathetically low CTR of 0.05%, and furthermore they claim they’re getting ripped off because it essentially cost them $100 per click. The publisher says they weren’t aware that the focus of the campaign was to drive traffic to the advertiser’s site. They suggest a few alternative strategies to try to improve the click thru: 1) put an ad with a “Click here” call to action, not just a logo which readers may not even be aware is clickable, 2) move the ad into the direct eye path of the reader (which will cost another $1000/mo), and 3) create a compelling reason for readers to click-thru. Perhaps offer a free whitepaper, a coupon, a free consultation, etc. The advertiser doesn’t want to spend any more money, nor spend any time putting together a whitepaper, so they opt for adding a “Click here” call to action.

After another month, the advertiser calls back excited about how they got 100 click-thrus that month, or a much better CTR of 0.25%, but they still think the advertising is on the expensive side at $20 per click. The publisher explains to the advertiser that the reason it still seems expensive is twofold: 1) your CTR is still not as good as it could be because the advertiser has not presented the reader with any compelling reason to click-thru, and 2) you didn’t factor in the branding effect of 40,000 views your ad and logo, many of which will likely generate business down the road just like traditional print, TV, and radio branding ads do. The publisher suggests if the advertiser is really just concerned with click-thrus and it’s CTR, it’s imperative to move the ad to a higher natural click-thru rate area (in the direct eye path of the reader), AND to leverage your ad placement investment by creating a compelling reason to click-thru. The publisher recommends the advertiser take a moment to consider the real goal of their campaign. If it’s branding, maybe the advertiser is getting the most bang for their buck right now. If it’s click-thrus, then take the suggestions above. The advertiser, focused squarely on getting a good CTR and driving click-thrus, decides to spend $1200 to outsource the writing of a whitepaper right away, plus spends another $1000 to move the ad into a better spot on the page.

A month later, the advertiser calls back wanting to renew, but wants to let the publisher know that he’s a little disgruntled that it took him two months before getting the results he wanted. He got 600 click-thrus this past month (a 1.5% CTR), only $5 per click, compared to only 120 the first two months combined (a 0.15% CTR). The publisher explains that the branding effect was comparable all three months, and probably a bit better the first two months so the advertiser should factor that in as well. Additionally, he comments that if the CTR and click-thru focus was conveyed upfront, action could have been taken earlier, but that the publisher couldn’t read the advertiser’s mind. Then the publisher suggests that if the advertiser wants to even further improve their CTR and click-thrus, if they act fast, they could secure the only other two competing ad spots in the newsletter, and effectively have exclusive sponsorship of the newsletter. The publisher explains that typically about 4% of readers click-thru onto one of the 3 ads in a newsletter. By buying all three spots, the advertiser’s aggregate CTR would likely approach that 4% number. The publisher also advises the advertiser to offer a new and different compelling reason to click-thru next month to get the best CTR and number of clickthrus.

This example above details many of the factors that can impact any ad campaigns CTR. Nonetheless, remember that the CTR and number of click-thrus may not even be your campaign’s primary goal. Figure your goal out first and go from there.

>> CPM (Cost per 1000 Impressions)

Authored in 2001 by Stephan Aarstol
while Director of Business Development
at AuntMinnie.com