Being presently involved in an advertising campaign for our latest release Lights Over Emerald Creek by Shelley Davidow, I thought I'd check to see how our advertising compares to industry averages for click-through rates (CTR) and conversion rates (CR). Surprisingly, given the poor return we're getting, it turns out we're actually achieving average rates in both categories.
- CTR = 0.05%, i.e. for every 2000 views of an advertisement, we expect to get 1 person clicking the advertisement to visit our site; and
- CR = 2%, i.e. for every 50 people visiting our site we expect to get 1 sale.
And no, the financials don't necessarily add up. For a series of advertisements designed to be viewed 86,000 times we're paying $330. That will probably give us 43 click-throughs, and possibly between one and two sales (at $5 each). At the moment we are still working to improve future CTR by focussing our ads in those blogs which give us the best return (the ads are presently being tested across 8 blogs, all with either a focus on YA Fiction, or SF&F). However, we are also using alternatives which have the potential of either increasing the CTR, or reducing the cost, for those with limited budgets.
But first back to basic. The click-through rate (CTR) is a way of measuring the success of online advertising (or the effectiveness of an email campaign) by the counting the number of users that clicked on a specific link. The actual rate is calculated by the following formula: CTR = (Number of clicks / Number of views) * 100.
The conversion rate (CR) measures the success of actually converting site visitors into paying customers, in our case someone who actually buys the book. The rate is calculated as follows: CR = (Number of purchasers / Number of visitors) * 100/
As stated above, a campaign we are presently running for a series of blog ads is giving us a CTR of 0.05%, with a conversion rate of 2%.
To reduce the cost of each click-through one option is to use Goodreads.com. Although Goodreads indicates that their average CTR is 0.05% (the industry average), on Goodreads you only pay on a click-through. The default rate is $0.50 per click, which is 1/10th that of the blog ads. Another advantage that Goodreads offer is the ability to increase conversion by reducing the upfront cost that the viewer faces. If you (as Goodread's recommends) keep the link on the Goodread's site rather than purchasing the book the individual will more likely simply add the book to their 'to read' pile, rather than decide to do nothing. Against this, however, is the fact that they may end up never purchasing the book.
In addition there is also the difficulty of getting an ad to run for more than 450 impressions per day. In Goodread's own words:
We use an algorithm to determine which ads are shown on the site. A major factor in this algorithm is initial click-through rate – that's the click-through rate for the ad in its first few thousand impressions for the day. The ads that generate more clicks in those first few thousand impressions are shown more frequently throughout the day, while those that don't generate as many clicks early are given a lower priority. This is how we make sure that the most relevant ads are shown most frequently. How the ad was performing the day before has no bearing on this, as each ad gets a fresh chance each day.
Another alternative is Facebook, whose new in-stream ad units appear to be generating click-through rates of 1 percent or higher (something like 20 times higher than alternatives). This appears to be because Facebook are positioning the ad in the newstream itself, rather than as a separate classifieds (digiday.com)
For those of you interested in reading more about what constitutes average rates try: Bryan Eisenberg's comments to the blog-post: Myth of the the two to three percent conversion, which didn't turn out to be that much of a myth. In addition you may want to have a look at the statistics compiled by Dave Chaffey in 2013 on click-through rates across various forms of web advertising.