AdAge.com recently reported on an intriguing trend towards lower participation rates in online display advertising (What to Measure? Only 16% of the Web Is Clicking Display Ads”).  The gist of the article is that only 8% of internet users account for 85% of all clicks on display ads, and that overall, so-called “clickers” only represent 16% of all U.S. internet users.

Before we get excited and start pulling display budgets, let’s bear a few facts in mind:

1) On the User side: When a consumer sees a display ad, a click is only one of a multitude of actions they may take in response.  Telling a friend or colleague, typing the URL into a browser, or simply filing away that brand interaction for future reference — these are all actions of interest to marketers who are looking to drive true engagement with their brands… to say nothing of search engine activity, which is demonstrated to be a direct by-product of display advertising.

2) On the Marketer side: Clicks are just the tip of the measurement iceberg — beware the temptations therein!  The click may be widely-appreciated for its ease of measurability, but as marketers we need to resist giving in to “Clickthrough Determinism” — the tendency to boil down consumer behavior into the simple arithmetic of click patterns.  When a click on a display ad leads to a purchase, we need to be taking into account all the communications and actions that transpire upstream in the purchase funnel.  It’s here that we really impact the value of media, using more profound metrics such as conversions (post click and post impression), cost-per-conversion and ultimately, dollar-in/dollar-out ROI.

Microsoft’s Atlas Institute found that over the course of a ninety day sales cycle, only 6% of accumulated data is taken into consideration for marketing purposes:

Perhaps this is why, as the comScore/Starcom report indicated, this year’s study “focused more on alternative measurement, suggesting that a low number of clicks doesn’t necessarily mean banners don’t work, but that marketers are looking at the wrong success metrics.”  Acknowledging that the digital “channel” is actually comprised of a few dozen unique channels (search, display, affiliate, mobile, video, social, etc), we prefer to use a holistic approach to brand health assessment.

Acknowledging that marketers can dig far beyond click activity for insights, we also took note of a 2009 Eyeblaster study which indicated that 2 out of 3 senior marketing executives run cross-channel campaigns, but 88% do not integrate performance data across channels.  This has been the basis for developing our comprehensive reporting system for Digital Brand Management, with a concise and actionable dashboard.  By measuring brand health on a standardized relative performance scale across specific metrics — and comparing to history, the industry or competitive set — it is possible to answer the question asked by many a brand manager, “How is my brand doing in digital?”

We’re glad that Advertising Age has shed light on the dilemma of Clickthrough Determinism.  The big issue for 2010 is, what do marketers plan to do about it?  Reducing display budgets would minimize the impact of one of the most efficient, accountable and innovative channels in the digital landscape, but it’s hard to ignore the raw numbers.

When it’s time to report to the CMO on the health of the brand, a standardized approach removes all the bottlenecks from the assessment phase, leaving more resources available for action.  In any halfway competitive category, this kind of competitive advantage can translate into significant gains in market share — and that’s the ultimate, measurable return on investment.

For more about our brand dashboard, or our philosophy on measurement and analytics, drop us a line in London or New York.