When I talk to Franchise or Brand executives a common question is, “If mobile banner ad conversion rates are so low, why should I buy them?” Recently I read an article by Shuli Lowy (Marketing Director at Ping Mobile) about why click through rates (CTR) should not be the only measurement on the effectiveness of mobile ads. I thought this was particularly relevant for Franchise Systems because of the distributed nature of the locations and the strong brand component of the system. Current estimated averages places the click through rates on mobile banner ads at 0.2 – 0.3 percent, (Forbes); others place it at 0.4 percent and some strong network systems such as AdSmart are able to achieve 0.88 percent. Regardless, everyone agrees that while banner ad CTRs are higher on mobile devices than they are on desktops, they are still below 1 percent.
SO WHY ARE SMART FRANCHISE SYSTEM STILL BUYING MOBILE ADS?
And another question: Why are companies skipping the call to action and intentionally lower their CTRs? Traditionally, strong calls to action (CTA) increase CTRs on banner ads (for example, “Free Item,” “Win Now,” “Shop Clearance” or “New Line Up”). However, a trend we are seeing is that more brands feature banner ads with no call to action. So are these brands making a fundamental marketing mistake? The answer: No, they are not! In fact, many marketers fail to realize that mobile advertising and marketing includes different consumer behaviors with mobile users. Many marketers don’t fully understand the value of mobile banner ads, the implications of a CTR, and mobile’s place within the purchase path. The mobile eco-system is changing traditional online marketing methods. We’re finding that mobile behavior doesn’t always correspond with usual consumer behavior. Recently, Google (clearly the preeminent experts regarding online marketing) released a report that studied mobile’s role in the purchase path. Google’s study found that smartphone owners spend a massive amount of time performing product research and discovery on mobile devices. However, while 93 percent of those consumers who explored a product ended up purchasing it, only 17 percent completed the transaction on a mobile device.
THREE STEPS OUT OF FOUR
This means that many mobile users use mobile devices to complete the first three steps of the traditional purchase funnel (Awareness, Interest, and Desire) but fewer use mobile to complete the last step (Action.) Franchise or Brand marketers who only measure a mobile ad campaign’s success based on immediate sale conversions are diminishing the true value of mobile ads. It is also important to know that an actual sale is rarely the result of only one ad interaction. An actual completed sale is the result of many marketing channel actions or repeated impressions; repeated strokes of a hammer on the anvil which results in a finely forged sword. A consumer who views a franchise or brand name or message just once is unlikely to complete a purchase. A potential customer who comes across it several times is far more likely to complete that same purchase. Almost every major Fortune 500 brand understands this implicitly as demonstrated by the Nike swoosh, the Coke bottle, the Geico lizard, or the Budweiser Clydesdales.
THE HIDDEN IMPACT
Let’s take a moment to focus on the often-ignored 99+ percent of people who come across a mobile banner ad and don’t click on it. For those people, the ad experience is that of an outdoor billboard. The viewer comes across an ad, visually consumes a message, and moves on. It is difficult to measure the efficacy of outdoor billboards—but nobody questions their impact. The value of outdoor billboards is typically determined by the surrounding traffic or “pairs of eyeballs” that come across it. In a digital sphere that would translate to the number of impressions—not clicks. For the “non-clickers,” a simple, bold name provides a greater indelible brand consumption than an ad that is cluttered with a call to action. Marketers who skip the call to action understand that it will lower the CTR and immediate conversions; their focus is on the crisp branding impact to the broader audience viewing the ad. Lowy quotes Anya Cheng, Group Manager Mobile Product at Target “A CTR is not a KPI (key performance indicator). You have to analyze the multi-channel brand impact.” Some marketers go further and completely devalue the implications of a click. “There’s really no correlation between clicks and whether people actually convert,” said Gokul Rajaram, Ad Products Director at Facebook.
NO CLICK DOESN’T EQUAL NO SALE
Rajaram pointed to a study that Facebook and Datalogix partnered to track sale conversions across 50 ad campaigns. The study found that 99 percent of sales were generated from people who saw ads but didn’t interact with them. “Ad impressions, rather than clicks, drive sales,” concluded Brad Smallwood, VP of Measurements and Insights at Facebook. And yet, one third of marketers are still judging campaigns based on CTRs according to Neal Mohan, VP of Display Advertising Products at Google. We all love the implications of a CTR because it’s one of the few data points we can obtain. And we all know that stronger calls to action on mobile may lead to better lead generation. But we also need to understand that as our clients move to mobile devices, CTR’s are just one component of a well-balanced multichannel marketing approach. Brand that do not recognizing the limits of a single indicator such as CTR fail to acknowledge and be attentive to the user experience and behavior of more than 99 percent of their potential customers.