Measuring Ad Performance
March 27, 2008 1:43 pm pw advanced, the competitionI was reading this article on Wired about Google’s recent drop in share price which is probably due to new data showing that click-through growth is slowing down for Google’s ads. There’s a lot of interesting stuff in there about what this might mean (Google talks about generating less click-throughs due to changes that should hopefully increase the quality of those clicks) but one line in particular jumped out at me.
“It’s not clicks that advertisers are really buying, it’s what those clicks get them, which is sales conversions,” said Sanderson.
This is something that we talk about a lot here. When we decided to go with the CPD (cost-per-day) pricing scheme, our biggest worry was that potential advertisers or publishers wouldn’t get it. CPM and CPC are the default metrics used for measuring ad performance across the industry and a lot of people seem to get kind of obsessed with them. It’s understandable, they are easy metrics to grasp and very easy to measure. The risk is that in focusing on these performance metrics, you can forget that they are really only indirect measures of success.
The only metrics that really matter to an advertiser should be CPS or CPF (cost-per-sale or cost-per-fan). CPC and CPM can help you to begin that analysis (which is why we offer both of these statistics as part of our analysis tools) but unless you complete the loop by analysing how many those displays turn into successful transactions (whatever that means for you), you haven’t really learned all that much.
-Tim
March 27th, 2008 at 3:18 pm
Greetings
True that CPS is the most important. What determine a successful advertising campaign is a benifit greater than it’s cost. Though a CPF is near imposible to determine, it is quite objective. CPM determine the amount of exposure that an advertising campaign receive. It is relatively reliable to know how many people had seen(and most probably looked away from) the banner. Which can be a reminder to old fan/customer to visit their bookmark once more.
As for CPC, this have a purpose as well. It tell the advertiser on wheter or not the web site have put the banner placement at a visible area of the web site and wheter or not the audience of the publisher is what the advertiser is targetting.
So while i agree that CPS is most important, CPC and CPM have their own importance in judging where to advertise.
March 27th, 2008 at 9:05 pm
I love being able to see the cost per click and cost per impression. It would be cool to have a similar chart on the “my ads” section that would show the total number of impressions and clicks you’ve gotten for each ad (you already have the grid, but it’s sort of hard to calculate the total number you’ve gotten altogether) and then maybe give you the clicks per impression percentage (like how many clicks per 100 impressions). That would help us tell which ads are more successful click-getters overall.
March 28th, 2008 at 11:02 am
Hi guys, you are on almost every blog I own, I love your work. Thanks for pimping up the dashboard, the changes are great.
Keep up the good work! Btw I am sure adsense will fire up again, don’t sit too long in the couch. hehe
April 6th, 2008 at 7:19 am
I would like some help evaluating how many ad boxes I should offer on my site(s), and what sizes. If I knew what the average, min, and max bid was for other sites of similar (broken down by ad size/dimension, maybe) then I would know how to configure my ad boxes to be more competitive.
Thoughts?
Thanks much,
Eddie
April 11th, 2008 at 11:36 am
“It’s not clicks that advertisers are really buying, it’s what those clicks get them, which is sales conversions,”
Absolutely! What would those clicks be if the click cannot be converted into some magical dollars.
I love your project. It’s taking so long for it to be wonderful on my sites but it’s slowly working. Hopefully, I will improve.
Many thanks!