Welcome to the December issue of Online Advertising Answers. For the last OAA of the year I decided to do Google’s bidding and look at some financial statements to demonstrate that no, AdSense is definitely not dead. I also go as basic as can be and take a deep dive into what CTR really means.
And finally, I delve into one of the most irritating problems on the internet – why (WHYYYYY!?!) sometimes a set of video ads load fine but then the video itself doesn’t.
To get your question answered (and possibly featured here) find me on Quora, and ask away.
Here we go…
This month’s questions are:
- Is AdSense Dead?
- What does the Internet term “click-through rate” mean?
- How is it that advertisements run flawlessly but the actual videos will buffer?
[Click these links to skip down to the question]
Q: “Is AdSense Dead?”
A: “Hi Dave,
No AdSense is not dead – it’s still widely used and hugely profitable. It’s certainly not as healthy as Google Ad Manager though. This is from Alphabet’s Annual Report (Alphabet is Google’s parent company).
AdSense gets mixed in with AdMob and Google Ad Manager customers, but you can see that in 2019 they reported making $21,547,000,000.
They do mention a decline in their AdSense business:
“Our Google Network Members’ properties revenues increased $1,537 million from 2018 to 2019. The growth was primarily driven by strength in both AdManager (included in what was previously referred to as programmatic advertising buying) and AdMob, partially offset by the general strengthening of the U.S. dollar compared to certain foreign currencies.
Our Google Network Members’ properties revenues increased $2,394 million from 2017 to 2018, primarily driven by strength in both AdMob and AdManager, offset by a decline in our traditional AdSense businesses. Additionally, the growth was favourably affected by the general weakening of the U.S. dollar compared to certain foreign currencies.”
But they also say that impressions grew by 9% between 2018 to 2019:
Again – they say the growth was primarily driven by Google AdManager though.
Overall it’s hard to say for sure as Google run both the ad selling and ad buying business and they mix these figures together. They mention a decline – but a decline in a $21.5 Billion company (or at least some large part of it) isn’t the same as something being “dead” in any reasonable way.
These stats are all from 2019 of course, and 2020 has been rough all over. I have personally seen lower Ad Impressions and lower Impression RPMs in many places so I suspect Google will have taken a big hit.
It’ll take a lot to make that hit hurt enough for AdSense to die though.
I hope this answers your question,
Q: “What does the Internet term “click-through rate” mean?”
A: “Hi Rob,
The term Click Through Rate means the percentage of people who click through from one place on the internet to another. It’s usually used to measure the performance of ads, but it can refer to anything – eg the click-through rate of a link is the per cent of people who saw that link, then clicked on it.
The CTR Equation
The formula for working out CTR is:
CTR = Clicks ÷ Impressions (then multiply the whole thing by 100 to turn it into a percentage).
What is CTR used for?
CTR is most often used to measure the performance of online ads. If an ad had a high CTR, then it means that ad is enticing enough to get people to click on it.
However unless the point of an ad is to get people simply to go to a webpage, CTR isn’t a very good measure. Ads should really relate to conversions (eg an action such a sale), and the rate at which the ad makes people convert is what is really important.
However if an advertiser is unable to track conversions for whatever reason, CTR is a reasonable fall back most of the time.
How can website owners improve the CTR of ads on their site?
For website owners, improving the CTR of ads is often the best way of increasing the likelihood of repeat business from advertisers. This is because conversion rate data is not always available, and most conversions come from clicks.
To improve the CTR of ads running on your site, the simplest way is to just place the ads above the fold:
By optimising the positioning of ads in this way, you will improve the general CTR of ads on your site. While there are other ways to improve CTR of ads on your site, this one action will make the largest difference by a long way, and take the least time.
What does CTR represent?
The definition of CTR is easy enough to understand, but what CTR actually represents can be thought of in three ways:
- CTR is the likelihood of someone clicking on your ad. If you got 10% CTR in the past, then it is likely that 10% of people will click in the future on that same ad.
- CTR is the speed at which people click on your ad. If you have a 10% CTR on an ad which is running, for every 100 extra ad impressions you run you should expect another 10 clicks.
- CTR is the probability that any individual will click on your ad. If you have a 10% CTR, then anyone who sees it has a one in ten chance of clicking.
Overall it kind of means how interested people are in your ad or post.
Is CTR a better measure than clicks?
In a way, yes. If you want lots of clicks on your ads, then you should prioritise where you get the most clicks from. However, if you need to maximise your clicks from a limited amount of ads, then CTR is a much better metric
This is because it takes into account how many people have seen your ad or link. For example:
- Ad A is seen by 100 people and gets 10 clicks.
- Ad B is seen by 1000 people and gets 50 clicks.
While Ad B got more clicks overall, people were less likely to click on it – Ad A had a CTR of 10%, whereas Ad B had a CTR of 5%.
This means that if Ad A and Ad B were shown to the same amount of people, Ad A would get double the clicks that Ad B did!
What is a good CTR?
There is no absolute answer for what a good CTR is. It completely depends on what format you are advertising in, and what you are advertising.
However, as I am well aware that is a completely frustrating answer, here are some helpful overall benchmarks:
For your own advertising, you should simply always aim to be improving. Using the above figures can tell you if your ads are in the right range of CTR, but only by comparing against your own past performance can you truly see if what you are doing is working.
I hope this helps,
Q: “How is it that advertisements run flawlessly but the actual videos will buffer?”
A: “Hi Thao,
The reason why video ads and the video they are running within don’t always work equally well is simply that they are coming from different places.
Websites can store their videos on any servers, including servers which are not suitable for the task. Videos are comparatively big files too, so to make them work in all locations they ideally need to run through a CDN so that the files can be delivered much faster. Depending on which website you are talking about, they might simply not be putting that much thought or effort into delivering videos.
It could also be to do with what is going on at your end. It could be that the videos stream perfectly to most people, but your specific combination of ISP, computer, location, browser, and other misc tech stuff might just not work well with theirs. It could be a temporary problem or just one they haven’t foreseen.
For video ads on the other hand – the people running them will have foreseen the majority of issues at this point. Video ads are almost always stored on different servers to the ones storing the videos you are watching. These third-party ad servers only exist in order to smoothly deliver video ads, and because of the variety of their clients (advertisers, not websites), they will be delivering video ads across a much larger portion of the internets users than any individual website. If these companies deliver ads badly to any significant amount of users they lose money & clients and will shut down. The ones which don’t fail are the ones which run ads seamlessly to the widest possible audience.
So the answer is simply that video ad delivery is generally tested a lot more due to its very nature than videos from any website.
It should be noted – if you’ve ever experienced it the other way around, it’s actually much worse. Video ads buffering or breaking in a way that makes you unable to finish watching the video you want is MUCH more annoying than them playing smoothly and getting out of your way. Of course, I want videos I’m watching not to buffer endlessly, but getting trapped by a broken ad is one of the most annoying experiences on the internet.
See you next year,