Online Advertising Doesn’t Work - Yet More Evidence

January 23rd, 2008

I recently came across a DoubleClick report entitled: Video Ad Benchmarks: Average Campaign Performance Metrics, which enthused about how video ads were 5 times more effective than graphic ads.

“Big deal,” I thought. Traditional graphic ads, banner ads etc have a click thru rate barely above zero, so 5 times zero is still nothing.

My assessment was confirmed later in the report where it stated: “…the click-rate for plain GIF or JPG image ads based on DoubleClick data is approximately 0.1%”

So let’s be clear about this. For every 1,000 people who see the ad, only 1 will actually click on it. If you couple that with the appallingly low conversion rates of 2% for most sites, then you need 50,000 people to see the ad just to make one sale.

You Will Lose Money

With the average cost of an order per campaign running at around $100, it is a very expensive way to get a sale. In fact, depending on what you’re selling and what your average order value is, it is highly likely the campaign is losing you money, a lot of money.

And that doesn’t include the creative cost of making the ad if you’re using an ad agency.

(The fact that video ads are only marginally more effective - 0.47% - only adds further weight as to how ineffective the whole online advertising strategy is.)

What ’s more, these figures haven’t improved in over 10 years.

That is, despite online advertising growing into a booming multi billion-dollar industry and attracting (supposedly) some of the best, most talented people, the industry is worse than ever at producing tangible, bankable results.

Accept the Evidence

And it’s not as if the evidence hasn’t been freely available to people who care to look. Every year there are numerous reports highlighting the dismal click thru rates of online advertising.

To hide the awful truth of such poor performance, the industry has resorted to the usual trick of inventing new terms such as “engagement” and, “awareness” etc. Don’t be fooled.

As leading web research expert and Google evangelist, Avinash Kaushik says: “Engagement is not a metric, it’s an excuse”

An excuse for not being willing to measure what really matters in business. And what really matters in any business is the bottom line - making a sale, making a profit, increasing the profit, reducing costs, generating a lead etc. Anything else is a path to bankruptcy.

What You Must Know

One of the great things about the web is that you can measure everything and see how effective anything is. Usually you will see results within 24 hours to 48 hours of implementing a direct marketing tactic. So, if your online advertising and marketing isn’t producing clear results within that time frame, then it simply isn’t working.

There are other much more effective and much cheaper options available.