Demystifying the CTR vs. CPA debate
MarkLives asked Michelle Pearman, a media planner at DigiVOX, to discuss what determines a successful online media campaign. Here Pearman tries to demystify several metrics used for measuring the success of your online campaign and weighs which one brings you closer to meeting your marketing objectives.
In a world of measurable marketing initiatives, what exactly constitutes a successful campaign? You design a great ad. People click on it. Objective met? Unlikely.
CTR (Click-Through-Rate) has been considered the benchmark for many years surrounded by debates on what constitutes a good CTR. Is this a discussion worth having?
If the objective is to sell tickets to an event, wouldn’t you care more about how many tickets you sold, and what the return on investment on your marketing buck is?
Differentiating between CTR (Click-Through Rate) and CPA (Cost Per Acquisition)
– CTR: The click-through rate is the number of clicks divided by the number of impressions, as a percentage. E.g.: 2,000 clicks achieved from 100,000 impressions = 2% CTR.
– CPA: This is the amount that an advertiser has paid to reach its objective. This could be to generate leads, competition entries, sales, downloads etc. E.g. If you spend R400, 000 on online media and achieved 1,000 sales (if your objective was sales), your CPA is R400.
The effectiveness of CTR, CPA and Campaign objectives:
CTR is but one possible measurement to assess if the creative is compelling enough to entice the target audience to click on it. From the CTR results you can assess whether the creative work needs to be relooked. One should, however, think twice about basing a campaign solely on CTR as, CTR does not indicate if an objective had been reached.
CTR does not produce accurate results from which one can base a campaign’s success as each click does not necessarily result in a land the target website. The drop-off from a click on an ad to a successful land on the landing page can be quite high (particularly with a very heavy, graphic-intense landing page).
When considering the unique objectives of a campaign, it would be best practice to base the success on CPA (Cost Per Acquisition), based on a clear objective which is set from the onset.
CPA = ROI:
Online advertising, unlike any other channel, allows us to track more than just how many times an ad has been displayed, clicked on, or even interacted with. It allows us to accurately measure ROI (Return on Investment). How much did it cost a client to acquire a sale/lead?
So why focus on CTR?
It is crucial to partner with an agency that understands your business objectives and employs the necessary technology to enable the tracking of these objectives, as well as monitor closely and remould campaigns in order to ensure the best possible CPA.
Every campaign has a specific objective. Be clear on the objective – determine your key performance indicators in relation to your objectives, employ the best possible technology to render robust results with regards to the tracking matrixes, continuously optimise throughout the campaign – and you’ll receive a more in-depth and relevant understanding of the effectiveness of your campaigns.
– Michelle is the Media Planner at DigiVOX. Pearman specialises in digital media strategy, planning, buying, negotiation and digital media optimisation.