A new report into the efficacy of banner ads claims to dispel myths about low CTRs and conversions.
Published by display ad firm Criteo, the report is essentially a rebuttal to a comScore research paper from 2008 entitled 'How Online Advertising Works: Whither the Click?'
ComScore found that a small subset of people, less than 10% of all internet browsers, were responsible for more than 80% of all clicks.
It concluded that those who click on banner ads tend to be younger and with low income, so were "hardly an attractive target segment for most advertisers".
Criteo disputes these findings, claiming that people who click ads are more likely to make a purchase, and the more ads a user clicks on the more products they will buy.
The report highlights several 'myths' about banner ads, and then seeks to dispel each one...
Methodology
The study looked at users exposed to a Criteo retargeted ad during the first seven days of March 2012, amounting to 147m users.
The sample was then split into two, those who had clicked on a Criteo banner in the previous six months, and those who had not. For each group, the report looked at the sales that these browsers had completed online during Q1 2012.
The groups are defined as 'clickers' and 'non-clickers'.
One key problem with this methodology is that any browser who clicked on other ads but not on a Criteo ad is therefore viewed as a 'non-clicker' in this study.
People who click on ads buy more products
Criteo's report claims that comScore's suggestion that people who click on ads tend to be younger and low earners isn't a fair measure of their value as customers.
Instead, Criteo looks at the purchase history of clickers vs. non-clickers and finds that those who have clicked on a Criteo ad tend to be more valuable.
While these results are not surprising from a study conducted by a display ad company, it does suggest that there is a correlation between clicking on a targeted ad and purchase history.
However the methodology didn't actually track the click to a purchase, it simply looks at the purchase history of those who clicked on an ad during the first week of March. Therefore, you can't definitely say that one causes the other.
Do people still click on banner ads?
ComScore's report found that average CTRs in 2008 were just 0.1%, and that "two-thirds of internet browsers do not click on any display ads over the course of a month."
Criteo suggests that its report found very different results, although it fails to actually reveal its CTRs.
Instead it highlights the fact that "almost half of regular buyers on our clients' e-commerce sites are clickers on Criteo ads."
Regular buyers are defined at those who made five or more purchases during Q1 – in contrast, non-buyers clicked on far fewer ads.
Our conclusion is that the most valuable browsers of an e-commerce site – their buyers – are engaging heavily with online display ads.
The evidence does suggest that regular buyers click on more ads, but this doesn't necessarily refute the suggestion that CTRs in general are still very low.
People who click a lot don't buy a lot
Another widely held belief that Criteo seeks to dispel is that there is s small group of internet users who have nothing better to do but click ads, but then don't make a purchase.
This too is inaccurate: those who click heavily are the same people who are buying heavily.
Criteo claims that the more people click, the more they buy.
Conclusion
Criteo concludes that "that the 'click' can be a genuine expression of purchase intent, and is not, as was suggested, mainly accidental or spurious".
It suggests that poorly timed or irrelevant ads are likely to perform badly, but says comScore's findings should not be applied to "properly-executed performance display advertising".
In reality it is unsurprising that Criteo has found evidence to support the efficacy of its ads, but the report does highlight some compelling statistics around people who click on ads and their propensity to buy.
However the sample size of clickers is likely to be much smaller than the sample size of non-clickers, so we do not know if they are directly comparable.
Similarly, the report does not claim that a click is a definite sign of purchase intent, just that there is a "compelling case" to suggest a relationship.
But that said, there is obviously a correlation between 'clickers' and the likelihood of making a purchase that supports the use of retargeting users with banner ads.
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