The VP of Online Industry Insights at Nielsen just put out an interesting polemic on the Click-Through Rate using online ad data purporting an R^2 of 0.07 between click-through rate and ROI. He concludes that “advertisers should not be overly focused on click through rates.”
Counterintuitive, indeed. Possibly true. Possibly huge. Unquestionably ripe for a bit of afternoon scenario playing; so here’s another possible picture: that while Click Through Rate seems to have a confused relationship with ROI, it probably gets along great with incremental revenue, i.e., a high R-squared with sales. Especially when it comes to product-specific, functional ads. That the reason for ROI’s disappointing performance is that ads which attract more clicks are often more expensive to place (e.g., front page, top-of-page ads). Perhaps the more interesting implication is that advertisers today still face significant pricing inefficiencies. That companies with rich databases, like Nielsen, have a real opportunity at hand to help clients figure out which mediums to use, page position to emphasize, demographics to target.
