Click-through rate: Sometimes, more is less

May 2007

High click-through rates. It’s the Holy Grail that many marketers chase. For any campaign, the first question and often the only measurement of success used is, “What’s the click-through rate?”

But if the ultimate goal is to generate sales, does the number of visitors who click through to your website really matter? Or is it more about who’s clicking and what they do after they click? When you think about it, click-through rates focus on quantity (think “traffic”), but what you need is quality (“sales”).

Since so much terminology is thrown around in online marketing, it is important to define what we mean by click-through rate. The click-through rate is a percentage, calculated by dividing the number of times the ad is seen, by the number of viewers who click it.

By focusing on high click-through rates, many marketers are actually yielding less sales per marketing dollar invested. BtoB marketers must reach a targeted group of potential buyers at a time when they’re ready to buy – so every click counts.

A publisher recently told us that one of their advertisers complained when traffic doubled, but the number of clicks-throughs remained constant, resulting in a lower click-through rate. When 1,000 people saw the ad and 20 clicked, the rate was 2% -- but when 2,000 saw the ad, even though that same number (20) clicked, the rate went down to 1%. The key here is that the same number of people who clicked still converted to customers, indicating that the quality remained the same and the same number of products were sold. Regardless, the advertiser was upset because he couldn’t see past the click-through percentage to the end result: the sale.

So what does all this mean? There are a few possibilities: (1) the new traffic is the wrong audience, a challenge the publisher must address) or (2) the new traffic is a different audience and might respond to a different message (the marketer’s challenge).

That is not to say that click-through rates don’t have a value – they do – but they don’t paint a complete picture. Click-through rate may be an indicator as to what outcome to expect or how the audience is responding to your ad’s message, but it might not.

A better metric to evaluate is the amount spent on advertising versus the amount of product sold. In the simplest terms: How much did you spend and how much did you make? For every dollar invested into an advertising project, how much revenue came in as a result of it? Tracking sales success is the most revealing way to measure effectiveness of advertising – but it’s not always easy to measure, especially in BtoB marketing.

Let’s look at an example of when a high click-through is irrefutably unsuccessful. If you buy a banner ad for a fixed $1,000 a year and you made $5,000, the campaign will be deemed a success. But what if that $1,000 ad had a 100% click-through rate, but sales were zero? Surely, this campaign would be labeled a dismal failure.

Measuring the sales, you earned five times the amount of the ad spend, versus measuring click-through rates, where you earned nothing. Which scenario would you rather report to your CFO?

Right about now, the naysayers out there are thinking, “you can’t directly tie clicking a banner ad to sales in BtoB with its long sales cycles.” Maybe not. But by evaluating any changes in sales volume after a particular ad campaign has run, you can estimate its success. It may not be as exact as the one-to-one relationship of click-throughs, but it paints a truer picture of your advertising’s ROI.

In fact, the decision to click is relatively unimportant compared to whether the prospect decides to buy after clicking. Turns out, when it comes to click-throughs, sometimes more is less.