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The Bubble Market for Clicks


When we at GALE begin advising a new client on audience-first media strategy, one key area of interest is the relative costs of reaching the same people across various channels. This “people-based” view can be quite eye-opening for clients who had been seeing media through one channel lens at a time. Though comparing all media properties on the basis of efficient reach to people isn’t straightforward, it is always worthwhile. The work of media buying is asset valuation, and the assets advertisers care about are not placements, but audiences.

One reason it isn’t straightforward is that some publishers serve impressions for free and only charge for clicks, while others charge for impressions and give the clicks away. It takes some work to directly compare the value of the same actions in different places.

For example, consider a display prospecting campaign with a $4 average cost per thousand impressions (CPM) on the one hand, and a search or social campaign with at $4 average cost per click (CPC) on the other. At a glance, these look equivalent — even if you realize we’re comparing the purchase of 1000 units to the purchase of one. Display ads are so rarely clicked, it’s reasonable to expect that a 1000 impressions gets you only one. If clicks are all that matters, the two very well might be equivalent.

Clicks are valued because they correlate with sales. Customers can’t buy if they never arrive. Especially if your sole business is e-commerce, you need people to click and visit.

Thing is, most people don’t need ads to find their way. Especially if a brand is famous, or serves the same customers repeatedly, visits can hold steady while click campaigns are paused. The goal for click-driving should not be just any clicks, but clicks that drive visits incremental to what’s driven organically and through other paid advertising.

Sellers of CPC advertising do not share this goal. Their job is to be a pathway for visits whether the ad influences the visit decision or not. CPC sellers create an audience for free impressions based in its members’ predicted likelihood to click. That is, ads are shown to people whose behavior already indicates the highest likelihood to visit the site. This bias in audience selection makes CPC ads less likely to exert influence than an ad that was placed randomly.

If the incrementality of a click campaign is zero, obviously, no CPC is a good price. However, what advertisers often don’t realize — until they see an audience-based analysis — is that even if the incrementality of their click campaign is 80%, impressions are probably a better deal. To get that wasted 20% of clicks, the seller casts a net in an overfished area, one you would have rejected. Your money would have been better spent on a different audience even if it generated zero clicks.

Instead of tilting ad service to predicted clickers, display CPM campaigns can prioritize audiences new to a given brand, but active in the brand’s category. This maximizes the odds that any activity resulting from the campaign will be incremental to other efforts. We find this sort of reach correlates better with incremental clicks per dollar. In a second phase, we look to prove that reach to at least some audiences is more efficient than CPC spending whether people click or not. For many brands, there’s more to gain from penetrating new audiences than striving for loyalty and upsell among a relatively small audience of clickers.

Adam Heimlich
SVP Media