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Beware advertising agencies reporting nonsense

A prospective AdWords client recently showed us the monthly performance report issued by an agency they’d used in the past. It looked very nice, with a line graph and a pie chart. But it was utterly meaningless, and the perpetrators really should be called out on this one.

For some reason, the agency had decided that their key performance indicator would be “click-through rate” from the advertising campaign. And until you start to think about it (which presumably most of their clients didn’t), this might seem reasonable. Getting a good click-through rate from the adverts ought to be a goal for the campaign, right?

Possibly. But it turns out that it could also be the last thing you want. The click-through rate is dependent on several things: the position of the advert on the page, the attractiveness of the advert wording, and the relevance of the advert. The position of the advert is dependent on the bid and the “quality score”, which in turn is dependent on the past and expected click-through rate, the quality of the landing page and the relevance of the advert. You’ll already detect a degree of interdependency here.

If all factors remain the same, and one is changed, leading to a better click-through rate, that’s a good thing. But in the real world, nobody can keep all factors the same, because some of them are to do with the competitive adverts in the auction. If we wrote a worse advert, but our competitors pulled out of the auction or bid less, our click-through rate would probably go up. At the simplest level, if we just throw more money at the campaign, our click-through rate would probably go up. So what?

The only way to measure the performance of an advertising campaign is by results. Now, in a technical B2B environment, it’s unlikely that your results measurement can be sales. But it could be actions on a web site, or even just counting the number of engaged visitors. These things can be worked backwards: if a new customer is worth £10,000 and 10% of enquirers become new customers, and 1% of engaged website visitors become enquirers, then engaged visits at under £10 each are a good investment. How click-through rate has any relevance at all in this real world, I just don’t know.

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