Case: CPM vs CPR
CPM v. CTR - what is the price for the click?
We know that display advertising is an effective way to get brand exposure and drive indirect activities like Google searches. We did a case study where we investigated the effect of display advertising on Google searches. This study was based on two months of campaign data because the search statistics wasn’t delivered by Google for January until March. The campaign did however run for three months.
So now that we got the statistics for January we got more data to analyse.
We have a customer who marketed themselves through display advertising, targeting a specific consumer group that was identified with our analytical service Strategic Audience Map. During the course of the campaign the customer wanted to optimise on clicks before reach as they prioritised measurable referrals in Google Analytics. So from November to December we optimised the campaign on CPM (Cost per Mille = cost per 1000 ad impressions) and in January the campaign optimised on CTR (Click through Rate – clicks per ad impressions).
We could see that in November and December the number of searches increased significantly on Google with all other factors being equal. But in January we can see that the number of searches fell very significantly, even though the display campaign was still running. The difference was that in January we had optimised the campaign on clicks, i.e. direct interactions instead of reach.
When you optimise a display campaign on clicks you select the ad impressions that are most likely to lead to a click. That means that you are filtering out some impressions to favour others, making the desired inventory smaller. Often this can lead to a higher price per ad impression when you buy marketing programmatically. This means that you get fewer ad impressions for the same budget (unless you are buying them at a fixed price).
Below you can see how the CTR improved when we started optimising on clicks.
And as we did this the number of impressions decreased.
And with that also the number of searches on Google.
1 170 098
As we can see in the table above the number of Google searches goes up when the ad impressions do and down when the ad impressions decreases too. Since the volumes have fluctuated month by month, it is hard to make a direct comparison, and with public holidays during the campaign period the months aren’t directly comparable due to change in user behaviour during the holidays. But we think that there is a clear indication of how reduced reach in the campaign affects the number of searches negatively (please observe that the key words that we have focused on had few or no competitors, hence the opportunity for this study).
If we look at the traffic that is measurable in Google Analytics, which is the tracking platform that the customer uses, we can see that the conversion rate from Display is about 1/6 of the conversion rate from paid or organic searches. That means that a customer that haven’t clicked on a banner and laters makes a Google search is 6 times more likely to convert than if they click the banner directly. The problem is of course that it is hard to prove and link the ad impression to the search action. And besides this Google themselves say that a consumer is more likely to click a search ad if they are familiar with the brand than if they are not.
- Display advertising that target the right type of consumer for your brand and offer has an indirect effect that can be hard to measure but is significant when it comes to indirect actions such as searches on Google (or other search engines).
- If you don’t have many competitors for the key words that your potential customers use to find you, your display campaigns should be used to create reach and awareness for your brand and offer.
- If you have many competitors for the key words that you focus on, be prepared to invest also in search marketing.
- If you optimise on CTR and traffic that is measurable (in Google Analytics or similar tracking systems) you might end up paying an indirect price for the direct traffic, i.e. that them indirect effect (that might be of higher quality) is removed. This type of tracking and followup becomes harder as 3rd party cookies stops working.
So what to do with these insights?
We would make the following recommendations:
- If you are ranking high on Google or buy key words on Google it makes sense to maximise reach before clicks on display campaigns.
- If you have a “always on” display campaign, make sure you target, and get the most reach possible in, the consumer segment most relevant for your brand and offer.
- Combine your “always on” campaigns that optimise on reach with temporary campaigns that optimise on clicks to reach specific sales goals.