comScore tells us how online advertising works…

In a new report published in December 2008, comScore gives us their views on how online advertising works – is clicks and click through rates really the right metric for measuring an online campaigns success?

In today’s economically challenging times, advertisers and their agencies appear to be moving their online display ad dollars from CPM campaigns that require payment based on the number of people exposed to the campaign to “payfor-performance” programs (“CPC” or “CPA”) that require payment when the consumer performs some desired action such as clicking on an ad. Data from Competitive Media Reporting shows that total online display advertising spending (CPM and CPC/CPA) increased by 8% Y/Y during the first half of 2008, while the Internet Advertising
Bureau reported a 15% increase. In contrast, Nielsen, whose data only includes CPM spending, reported a 6% decline in display advertising over the same time period.

Click rates have fallen dramatically in recent years to levels under 0,1%. The comScore research* revealed that two-thirds of Internet users do not click on any display ads over the course of a month and that only 16% of Internet users account for 80% of all clicks. ComScore’s research also showed that the demographics of clickers are skewed towards younger users aged 25 to 44 earning less than $40,000 per year. Even search ads, presumably the most effective form of online marketing, are only clicked on 4% of the time at Google, and 2% at MSN and Yahoo!, according to comScore statistics.

But are low click rates evidence that an ad has not had any impact on consumer behavior? Or, does online display advertising work in a similar manner to traditional offline advertising with multiple exposures over time being needed to effect a change in consumer behavior? Below you’ll find the key findings from the report:
It’s clear that display advertising, despite a lack of clicks, can have a significant positive impact on:

• Visitation to the advertiser’s Web site (lift of at least 46% over a four week period)
• The likelihood of consumers conducting a search query using the advertiser’s branded terms (a lift of at least 38% over a four week period)
• Consumers’ likelihood of buying the advertised brand online (an average 27% lift in online sales)
• Consumers’ likelihood of buying at the advertiser’s retail store (an average lift of 17%)

In the Retail category, it is also clear that while the lift in sales from a display ad is lower than the lift from a search ad, the reach of a display campaign is typically far higher than that of a search campaign. When the sales lift is weighted by reach, display campaigns generally outperform search campaigns. However, the combination of a display and search campaign delivers substantial synergy, with the sales lift from the combined strategy being greater than the sum of the individual components.

By not relying on cookies and instead tracking computers that have comScore’s monitoring software installed, comScore research also shows that online advertising can have a substantial latency effect on consumers’ online behavior while also having the ability to drive increased traffic into retail stores, resulting in meaningful increases in offline sales.

The report provides great insights into who clicks on online display ad’s and shows that display advertising really have an impact on consumer behavior. If we combine these findings with ad serving & tracking technology from companies like eyeblaster we can move the evaluation of online campaigns to a whole new level. When it’s possible to see the time spend interacting with a rich media ad on top of clicks, click through rates, CPC etc., then online display advertising really get’s comparable with TV. Furthermore online advertising still have the clear advantage that you can directly interact with the media.

Hopefully the findings of this report will help us move budgets to online advertising and get marketing people to really see the advantages and possibilities of using online advertising.

You can download the full report from comScore’s website.

*The research is based on comScore’s proprietary panel of 2 million global Internet users and does not rely on cookies to track users. The data is statistically weighted and validated through comparison to 3rd party data.