Why Do Internet Ad Click-Throughs Matter?

Why aren't advertisers willing to pay as much for Internet ads as print ads? Media companies have agonized over this question countless times over the past several years. One potential explanation: advertisers aren't getting the click-throughs to indicate that people are paying enough attention to online ads.

That's one theory from an Atlantic reader commenting on James Fallows new magazine piece on how Google is saving the news. The reader says:

The ability to measure the way people engage with advertising online only makes it more worthless. Industry average for CTR (click-through-rate) is usually cited somewhere around .12-.15%. In my experience working at a network that had stricter than normal standards for intrusive ad designs, it usually proved to be about half that. Eight clicks per 1000 people that "viewed" an ad. Probably half of those were by accident. This is the metric that most buyers care about, and it just serves to emphasize how unengaging most of this stuff is.

This started a bit of a blogger tiff. The Washington Post's Ezra Klein appears to agree, and thinks it could have bad implications for the future of media advertising:

Online, however, that "not caring" has become too undeniable. The tiny handful of click-throughs, most of them accidental, are almost an insult to the advertiser.

But Matthew Yglesias at Think Progress retorts:

Maybe! But I also think it's possible that advertisers are just irrationally underrating online advertising. After all, when Ford buys ads for the Ford F-150 during NFL games surely they already knew that only a tiny number of people would see that ad and then go "maybe I should buy a Ford F-150."

Indeed, why are advertisers so obsessed with click-throughs? Think about an ad in a newspaper. When you press on it to click through, all you end up with is an inky finger. So where do advertisers get the idea that you cared more about the print ad than you did if you read the same article next to a similar ad on the newspaper's website? At least with online ads there's a chance you'll click through.

And where's the harm in the accidental click-through? The same can happen with print. That's when you're trying to flip quickly past a magazine ad, but your hand slips and fails to turn the page as quickly as anticipated. Unfortunately, no one keeps track of those mishaps.

Most ads are only effective insofar as they create brand recognition and very basic product information. You can learn more about a product by clicking-through an ad to the website, but you aren't going to learn anything more from a magazine ad that you glance at than an Internet ad that momentarily catches your gaze.

Here's an experiment companies should try. Let's use Apple as an example. Imagine that it advertises on websites and in magazines. Every time a product is sold that doesn't result from an ad click-through, it can ask buyers whether a print ad convinced the customer to make the purchase. In the cases they identify the magazine ad, compare that to how many sales resulted from click-throughs. Does anyone really find it plausible that the number wouldn't be roughly the same? As Yglesias says above, a single ad rarely leads to a sale, so how did companies come to have this strange perception?