RE: Venting (was RE: search vs. content)

From: Mitchell Kelley <esc1krm_at_ups.com>
Date: Tue 03 Jul 2001 10:33:23 -0500

BRANDI JASMINE <bj_at_brandijasmine.com> WROTE:

> And I still think the ultimate effect - that
> 100,000 eyeballs on Astrology.ca is the same as 100,000
> eyeballs on a Yahoo search for Astrology. I just think we'll
> never be given the chance.

TO WHICH ALEX CHUDNOVSKY <alexc_at_jungle.com> WROTE:

> This is what in my opinion described current problem
> -- people are/were too obsessed with click-through
> ratio, completely ignore CONVERSIONS (which can be
> defined as not just orders placed).
>
> What many people fail to understand is that 10%
> conversion out of 1,000 clicks is a lot better than
> 0.1% conversion out of 10,000 clicks. They just
> dont get it, partly because there is no uniform
> method of tracking conversions, as its not as easy
> as click-throughs. Until critical mass of people
> realise that fact and sort it out, we can expect
> having "professional media buyers" making risk-avoidant
> (as you rightfully put it) decisions. After all, no one
> got fired for buying into Yahoo, right?

I've read many posts debating clicks versus conversions,
and I wanted to add my methodology for measuring online
ad performance to the list... My company has an
in-house system that tracks each ad placement from
click-through on, so I am able to determine return per
placement, per ad. This is the most important
measurement of performance, as it allows me to compute
very accurately return on investment (yes, I know that
not everyone who sees my ad clicks it and may visit
later; I have a method for tracking 'unknown' users as
well). However, click-through rate is still an
important measurement also.

Before I make a buy, I consult historicals to
approximate a CTR and then put the proposed buy through
my yield model. The model depends on these metrics -
impressions, cost, clicks, buyers, average $/buyer,
total $, and ROI. I can change elements in the model
to make my ROI what I need it to be, and that's what I
negotiate & plan for. My point is: I know I have to
get a certain amount of traffic through the door to make
the rest of the model work. If I don't get traffic, I
can have no conversions. Thus, CTR is important to me
because it has an impact on conversions. Note that I
will not keep a campaign with a great CTR but low
conversions, because of the impact on ROI. But if I
only get 10 people through the door, 9 of them become
buyers, then my conversion rate is 90% - great, right?
Nope, because I spent $5,000 getting those 9 buyers who
spent $10 each = $90. Devise your own yield model and
revise it as you learn. Don't be fooled by agencies
telling you a 0.03% is acceptable - likely, it is not
sufficient to drive the traffic you need to gain decent
conversions.

Kelley Mitchell



Received on Tue Jul 03 2001 - 10:33:23 CDT