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A new report into the efficacy of banner ads claims to dispel myths about low CTRs and conversions.

Published by display ad firm Criteo, the report is essentially a rebuttal to a comScore research paper from 2008 entitled ‘How Online Advertising Works: Whither the Click?’ 

ComScore found that a small subset of people, less than 10% of all internet browsers,  were responsible for more than 80% of all clicks.

It concluded that those who click on banner ads tend to be younger and with low income, so were “hardly an attractive target segment for most advertisers”.

Criteo disputes these findings, claiming that people who click ads are more likely to make a purchase, and the more ads a user clicks on the more products they will buy.

The report highlights several ‘myths’ about banner ads, and then seeks to dispel each one...

Methodology

The study looked at users exposed to a Criteo retargeted ad during the first seven days of March 2012, amounting to 147m users.

The sample was then split into two, those who had clicked on a Criteo banner in the previous six months, and those who had not. For each group, the report looked at the sales that these browsers had completed online during Q1 2012.

The groups are defined as ‘clickers’ and ‘non-clickers’.

One key problem with this methodology is that any browser who clicked on other ads but not on a Criteo ad is therefore viewed as a 'non-clicker' in this study.

People who click on ads buy more products

Criteo’s report claims that comScore’s suggestion that people who click on ads tend to be younger and low earners isn’t a fair measure of their value as customers.

Instead, Criteo looks at the purchase history of clickers vs. non-clickers and finds that those who have clicked on a Criteo ad tend to be more valuable.

While these results are not surprising from a study conducted by a display ad company, it does suggest that there is a correlation between clicking on a targeted ad and purchase history.

However the methodology didn’t actually track the click to a purchase, it simply looks at the purchase history of those who clicked on an ad during the first week of March. Therefore, you can’t definitely say that one causes the other.

Do people still click on banner ads?

ComScore’s report found that average CTRs in 2008 were just 0.1%, and that “two-thirds of internet browsers do not click on any display ads over the course of a month.”

Criteo suggests that its report found very different results, although it fails to actually reveal its CTRs.

Instead it highlights the fact that “almost half of regular buyers on our clients’ e-commerce sites are clickers on Criteo ads.”

Regular buyers are defined at those who made five or more purchases during Q1 – in contrast, non-buyers clicked on far fewer ads.

Our conclusion is that the most valuable browsers of an e-commerce site – their buyers – are engaging heavily with online display ads.

The evidence does suggest that regular buyers click on more ads, but this doesn’t necessarily refute the suggestion that CTRs in general are still very low.

People who click a lot don’t buy a lot

Another widely held belief that Criteo seeks to dispel is that there is s small group of internet users who have nothing better to do but click ads, but then don’t make a purchase.

This too is inaccurate: those who click heavily are the same people who are buying heavily.

Criteo claims that the more people click, the more they buy.

Conclusion

Criteo concludes that “that the ‘click’ can be a genuine expression of purchase intent, and is not, as was suggested, mainly accidental or spurious".

It suggests that poorly timed or irrelevant ads are likely to perform badly, but says comScore’s findings should not be applied to “properly-executed performance display advertising”.

In reality it is unsurprising that Criteo has found evidence to support the efficacy of its ads, but the report does highlight some compelling statistics around people who click on ads and their propensity to buy.

However the sample size of clickers is likely to be much smaller than the sample size of non-clickers, so we do not know if they are directly comparable.

Similarly, the report does not claim that a click is a definite sign of purchase intent, just that there is a “compelling case” to suggest a relationship.

But that said, there is obviously a correlation between ‘clickers’ and the likelihood of making a purchase that supports the use of retargeting users with banner ads.

David Moth

Published 26 June, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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Comments (13)

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philip bird

very interesting

over 4 years ago

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Dan

Interesting post, was ComScore's report based on retargeted users like your report or just general display adverts?

over 4 years ago

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Jack Jarvis

I have used Criteo (and still do). It does work, but requires quite a bit of tweaking to get the balance between spending enough to get your ads shown and controlling spend so you get a return.

Either way, its great online advertising at a low controllable and accountable cost.

Criteo are however limited in terms of breaking down campaigns (I think you can run 20 campaigns) so if you are used to running hundreds in Google PPC then it will not be as controllable.

over 4 years ago

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Deri Jones, CEO at SciVisum.co.uk

> ComScore’s report found that average CTRs in 2008 were just 0.1% ... Criteo suggests that its report found very different results, although it fails to actually reveal its CTRs.

Right there - that puts me off the Criteo report.

When key numbers are left out and instead suggestive words are used....hmmm that's not science you can depend on in my book. Just PR!

over 4 years ago

David Moth

David Moth, Editor & Head of Social at EconsultancyStaff

@Dan, comScore's report just looked at general display ads, not retargeted ads.

@Deri, I agree, that part of the report is rather suspect.

over 4 years ago

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Dan

RaRetargeting and general display advertising are totally different so I don't know why they would compare these reports. The ComScore report stated that users who clicked on banners had low income. Criteo disputes this fact? I don't know how they can dispute it? e.g. their clients may have sites that are high end and niche which they have done this survey on.

over 4 years ago

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Jack Jarvis

@Dan - I Agree that the reports shouldn't be compared, but I don't think niche markets really have much to do about it.

With retargetiing the person has already been on the site and has an interest, so whether this is a pair of trainers or strings for an 18th century harp - this shouldn't affect their chance of clicking.

over 4 years ago

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Patrick Wyatt

Thanks for all your comments - great to see the debate starting.

@Deri & David: absolutely nothing to hide here. I didn't focus on CTRs in this report because the main issue was the conversion habits of clickers v non-clickers.
But happy to tell you the numbers. Average Criteo CTRs this month are around 0.7%.

@Dan: Yes - I think that we were clear that to the extent that comScore was talking about brand Ads, and we're talking about Performance ads... then there's no conflict here. My point was - if you want to sell something online, then you should care about clickers.
Check out this recent piece from comSore here though:
http://www.comscore.com/Press_Events/Press_Releases/2012/4/For_Display_Ads_Being_Seen_Matters_More_than_Being_Clicked
Here they are talking about transactional performance Ads - so yes there is a disagreement there

over 4 years ago

David Moth

David Moth, Editor & Head of Social at EconsultancyStaff

@Patrick, the missing CTR stat did seem like a glaring omission in the report, so thanks for clarifying that for us.

over 4 years ago

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Jacob

Criteo conveniently "forgot" to mention that a huge chunk of clicks that they deliver happens after the buyer converts, because in many cases they keep serving impressions even after the purchase happens. That segment had always contributed many clicks.

about 4 years ago

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Deri Jones, CEO at SciVisum.co.uk

Jacob - How much is 'huge chunks' in % numbers ?

I know it annoys me to see targetted ads for what I have already bought just hours or days ago! So I never click them. Maybe some folks do ?

about 4 years ago

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Jacob

Hi Deri - this is something we need to ask Criteo, because such parameters must be included in this report if one wants to discuss the subject openly. From my previous experience of retargeting with them (not directly but via clients), and from my 5+ years in the retargeting, I know that if the merchant does not demand explicitly to unpixel the user post conversion - that user continues getting impressions served. In cases where a merchant sells frequently re-purchased products, from a CPC point of view for a retargeting company it makes absolute sense to keep showing banners (sometimes with some delayed cookie etc). When we ran tests on such segments, the CTR was between 2 and 4 times higher, although PCCR of course lower. These post purchase clicks are both for convenience (if one wants to check the order status, account etc) and psychological - familiar banner, familiar content. Clicks alone are not the converting tool, so there is no point to try and impress the public with bombastic studies based on a partial picture only.

about 4 years ago

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Patrick Wyatt

@Jacob, Deri

An interesting challenge - I didn't want to focus too much on Criteo here, because my point was broader...but since you are curious, happy to explain!

When a user buys a product, we show them adds for other products that complement the one they bought (NOT the poduct they just bought). We offer all our merchants full visibility into which clicks and conversions come from users that have ever previously bought from their site. Almost all our merchants advertise to this group, because they want to upsell and re-engage their buyers. There are obviously some sites where this makes less sense (think subscription pet food...), but these are fairly rare.

This group represents, on average, 10%-20% of clicks... So not a "huge chunk".

Hope this clarifies matters.

about 4 years ago

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