Why CTR (Click-Through-Rate) is a TERRIBLE Metric And What to Measure Instead

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Shama :

When you look at click through rates, you look at which platforms use them. So search engines, social platforms, the whole point of these platforms is to convince you that advertising with them is a good idea. Now, how do you keep doing that? Well, if you get click throughs. So if you can show the that, and if they can help you see that your ad is getting clicks, which means it’s getting engagement. But these are two very separate things. Just because someone is clicking on your ad doesn’t actually mean that they want to engage in your content. Now I know that sounds counterintuitive because you’re thinking, well, Shama, why would they click the ad? Well, they’re clicking the ad because they’re just curious. In fact, that’s where the term clickbait comes from, which a headline or a picture or something that appeals to our human curiosity and nature makes us want a click and see what it’s about. But in fact, click through rates, CTRs, have a negative correlation with brand recall, with pretty much anything that actually matters for engagement, with intent to purchase.

Shama :

So what this means is the people who are actually clicking the ad are the least likely to buy. They are the least engaged audience. They might be the more curious audience. What it means is that your ad is doing a good job peeking people’s interests, but rarely do very interested buyers click through on ads. Some of the research shows us that up to 85% of clicks online are actually bots or bot traffic or bot farms, which means a real human being isn’t even clicking on the ad. More so, if you were really going to run a test and you just ran a black banner, a black banner, no text. That might end up getting more clicks than your actual content or your ad.

Shama :

Now you may see why is that? Curiosity, people are curious about what is the black box. So they click on it or bots that go out there and there’s a lot of click fraud, they’re advertising overall. Performance advertising is dealing with this and has been dealing with it for the last few years. There’s a lot of fraud online because you don’t know where those clicks are coming from. So really interesting that this metric that everybody relies on consistently to show that their advertising or marketing is working is actually a really poor metric. In fact, sometimes the higher the clicks that you get, the more negative correlation it has through people who can’t recall the brand, they don’t have positive intent, they don’t have buying intent. And so then the question of course naturally becomes well, would do you look at if click throughs are just a poor measure of engagement?

Shama :

Well, the metric that Nielsen and so many others, and the metric that we ask all our clients to look at, we measure consistently is share of voice, SOV. And basically what this means is how much of the conversation in your industry does your company dominate versus your competitors? All right, so I’ll use Zendaya again, as an example. You’ve seen me use her before in previous videos, because I think she’s just such a great example in so many ways, but Zendaya is a Gen Z princess, she’s one of the most beloved celebs right now. And if you compare her market share if you will, to others, celebs in the industry, she outranks them all. But then the way you look at this is the sheer voice. So the amount of stories about Zendaya and what she’s wearing and what she’s doing are also higher than all her competitors and peers in the industry. So as people talk about her more, her clout increases, her influence increases, and hence she’s able to command higher fees for her movies, her market share goes up.

Shama :

Companies are no different. It used to be for hundreds of years that we valued exposure over fake interactions. Think about when you’re watching Netflix, or as you’re watching this video, if every few seconds I stopped and said, are you finding this helpful? Please click on this if you are. It’s very distracting at best, and at worst, a complete mess of a way to really check engagement of whether people are actually engaging with your content, which is constantly getting them to take some sort of action to let you know. Now, yes, that may give you some numbers that may look good for your reporting, but it really doesn’t add any value to the audience. It doesn’t build any trust. It doesn’t build any integrity. And it definitely doesn’t help increase your influence. And we’re living in a time where influence is very much the currency of choice.

Shama :

All right, I mean, if you look at crypto, you look at NFTs, you look at all of this. The underlying principle here very much is influence and influence is hard to measure. It’s not measured in click through rates. Share voice is the thing that comes closest to letting you measure how much of that conversation do you really own in the marketplace? Who’s talking about you? What are they saying? What’s the tone? What’s sort of the brand sentiment, if you will, around that? And these things are way better metrics, [inaudible 00:05:26] for hundreds of years, because marketing and advertising are not new professions. One of the oldest professions in the book.

Shama :

As some of the oldest professions in the book, marketers have always built brands around exposure. I mean, for the longest time you didn’t have the internet, you didn’t have the ability to ask people their opinions. So did we think that it just wasn’t working? Well, of course not. That’s why you have brands with such amazing history with track records. Part of that is the more exposed you are to a brand, the more you trust it, the more likely you are to do business with it. Now this applies across the board, the internet didn’t change any of this just because we can measure things, there’s this obsession now with analytics and we’re really trading the meaningful for the measurable. And I’m merging you not to do that. So I want you to think about engagement more broadly.

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