New ad-efficacy metric from Google sheds light on a changing industry
The boom of Internet advertising has led to the use of clicks through (CTR) and impressions becoming the predominant sources of online consumer metrics. CTR does so by simply measuring how many times an advertisement is clicked on and impressions are essentially just ad views.
However, despite the Interactive Advertising Bureau’s recent report that Internet advertising is at an all time high, the fact of the matter is that 60 percent of online ad impressions are never seen (according to Google’s new visibility research) Furthermore, a recent year long study by xAd posits that click through (CTR) is a meaningless metric.
“CTR by itself is a poor indicator of ad performance and may be “completely unrelated, or even negatively correlated, to the other measures capturing metrics such as calls, directions and store visits”
The answer to this issue, according to Google, is offline. Their new metric essentially gauges if an advertisement view leads to an in-store visit. The method uses that pesky location history feature on all of our smart phones. After you view an ad, there is a 30-day window to see if that view led to a store visit. This is an important change in direction for online advertising metrics because it provides more tangible numbers for marketers to analyze. Also, despite the exponential increase of spending on online advertising, according to the most recent Census Bureau, only 7 percent of sales happen online. So while the online metric community has been worried about clicks, it has been missing the bulk of the action happening in store.
What this means for retailers and the metric community going forward is that the results of advertising online are going to become more quantifiable via visits (and eventually sales). Facebook is also trying to deliver similar metrics to advertisers and retailers and you can see how a program like their “custom audiences” will soon lead to in-store purchases being tied to online ad-views.
Naturally, this is going to lead to some privacy concerns. However, Google has said that they won’t release any information about the individual customers (just the raw data) and you can (at least at this stage) set your phone to not allow for apps to use your location history. Privacy is an ever-changing discourse but it’s hard to deny the notion that offline metrics are going to become more and more prevalent. All major ad platforms and networks are going to have to offer these offline metrics in the near future; once again Google changed the game.