It’s All About the CTR and Why It Doesn’t Matter
Click-through rate (CTR) is one of the most important KPI’s – if not the only KPI – in the advertising industry. It’s a common goal to keep cost-per-click (CPC) and cost-per-impression (CPM) down while maintaining a high CTR, but it’s not a valid goal if the traffic you are receiving from your advertisers isn’t comprised of the right people.
The Birth of Click Bait
Certain types of paid advertising (such as PPC) are administered based strictly off of keyword targeting and content that matches users’ intent. In this case, the quality of the traffic is directly correlated to the terms that are bid on. Social networks also allow precise targeting, assuming the right persona is used and the correlating psychographic information is accurate. When the advertiser delivers a high CTR to the client (even if it’s the wrong type of traffic) it’s still a reasonable metric of the advertiser’s success. If the campaign does not perform well, the only person to blame is the marketer.
So if we just said that CTR matters, then why does it not matter? The truth is, I bent the truth a little. CTR does matter, but only in instances where you can control your ads. What are the instances where you can’t control your ads? Welcome to modern day native advertising.
I’ll have to admit that Taboola and Outbrain were neat back in the day. There wasn’t as much content floating around in the universe and there wasn’t as much competition for attention spans. When content marketing came into vogue and the fluster storm of content arrived, readers’ guards went up and the resulting effect was the birth of click bait.
The Bait & Switch
Click bait helped readers get over their cautious consumption of content by pulling them away from their logical inquisition and appealing instead to their emotions. Then seconds later, their emotions would be crushed, realizing they were baited and switched.
Native advertising platforms soon moved in to police click bait and restore trust to their audience. They achieved this by allowing publishers the freedom to choose what did or did not show up in their content recommendations. They did this all with one goal in mind: CTR.
This is where I tell you that the CTR doesn’t matter. As a user of native advertising platforms, it’s important to know their history and how they work.
Content Recommendations as a Form of Native Advertising
These platforms receive a lot of content and subsequent bids for CPC. They then put them in a marketplace where gladiators fight to the death and the winners earn spots on the widget. The championing content gets shown to visitors of the publisher’s website and the content with the most clicks get shown more frequently.
This does two things:
- Determines which content pieces “you may like” by others’ popularity
- Ensures the content that gets clicked the most gets shown the most, thus increasing CTR
This makes advertisers think that they are doing their job by “targeting” the right content. The content that is popular on a site continues to be served and clicked. The advertisers are happy and everyone profits, right?
No. The CTR is high and the unlucky winner is you. Let’s do a simple math problem.
- Content Piece A receives a high CTR of .8% with a bounce rate of 94%
- Content Piece B receives a low CTR of .2% with bounce rate of 76%
- Each content piece receives 100,000 impressions
We can use the following equation to solve for the traffic’s level of engagement, an indicator of quality traffic:
They appear to be equal, right? Wrong. Let’s also consider the bounce rate:
Now Factor in CPC:
The Detrimental Effects of Buying Bad Traffic
Both these estimates have produced very similar results from our paid media testing. Based on these results, we can see that they both drove the same overall amount of good traffic, but one cost more and generated more bad traffic (as indicated by number of readers who bounced).
There is more to it than just the extra $20 dollars wasted buying bad traffic. The extra $20 bought worse experiences for the users who did not find what they wanted. They will continue to trust the native advertising platforms less and less, as well as remember having a bad experience with your brand.
This is the downfall of the native advertising platforms. They are purely optimized for CTR because that is how they generate their cash cows. While some platforms boast that they offer “optimization,” through experience, they only turn off sites that are sending you bad traffic after the undesirable experience has already happened. There is no way for these platforms to identify the right user that best deserves that ad. You end up renting dynamic digital billboards that can be removed by the owner of the land the billboard sits upon at their own will.
The Path to Better Content Recommendations
Here are some steps you can take while the functionality of these platforms continues to mature.
- Remove the content that is performing poorly yourself. Ad sets can be modified and it is in your best interest to do a periodic monitor of the performance and do some tidying up.
- Target for what you can. Some platforms allow regional and mobile/desktop targeting. You should always push your content to the right regions, as well as think about the users that might consume the content. Is the content long and informative? Target desktop. Is the content short and leads to more questions? Use mobile. Test to see what works best for you
- A/B test your titles. Just because the systems can ingest through an RSS feed, doesn’t mean you shouldn’t think of this like an ad. Find articles that are performing well and A/B test the titles to reduce the costs.
- Finally, not all content is best for native advertising. Really informative content that has high barriers to consumption should be distributed by the right promotion channel. Oftentimes, shared tweets by influencers and the amplified versions draw the best user engagement because of trust and credibility.
What are your experiences with native advertising and some of your tips and tricks?