If mobile banner ad conversion rates are so low, why are we still buying them?

By Shuli Lowy (Marketing Director, Ping Mobile)

You can find more estimated averages of mobile banner ad click through rates (CTR) on the web than knock knock jokes. Forbes places it at 0.2 – 0.3%, others place it at 0.4% and some “extremists” place it at 0.88%.

Regardless, everyone agrees that while CTRs for mobile banner ads are higher than they are on desktops, they are still well below 1%. Purchase conversions for mobile banner ad campaigns (which play off the initial CTR) are low as well.

Are you turned off yet? Well here’s the clincher: According to a study performed by GoldSpot Media, up to 50% of clicks on mobile banner ads are accidental (we call this the “Fat Finger Syndrome”).

So Why Are we Still Buying These Ads?

And one more question: Strong calls to action increase CTRs on banner ads (i.e. Free Item, New Line Up, Win Now, Shop Clearance). Recently, we are seeing more brands feature banner ads with no call to action.

Why would companies skip the call to action and intentionally lower their CTRs? Are they making a basic mistake?

No, they are not; in fact, many marketers fail to understand the value of mobile banner ads, the implications of a CTR, and mobile’s place within the purchase path.

Recently, Google released a report that studied mobile’s role in the purchase path. The study found that smartphone owners spend a massive amount of time performing product research and discovery on mobile devices. However, while 93% of those that explore a product end up purchasing it, only 17% complete the transaction on mobile.

Three Steps Out of Four

This implies that consumers use mobile primarily to complete the first three steps of the traditional purchase funnel (Awareness, Interest, and Desire) and less so the last step (Action.) Brand marketers who only measure a mobile ad campaign’s success based on immediate sale conversions may therefore end up disappointed.

Closing a sale is also rarely the result of one ad interaction. It’s the culmination of a multi-channel or repeated effort; several strokes of a hammer that chisel a stone until it reveals a finely carved statue.  A consumer who views a brand name or message one time is unlikely to complete a purchase. A consumer who comes across it several times is far more likely to. Each ad view or branding consumption chisels away a little more.

The Hidden Impact

Let’s take a moment to focus on the often-ignored 99+% of people who come across a mobile banner ad and don’t click on it. For those people, the ad experience structurally resembles 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 more 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; but their focus is on the crisp branding impact to the broader audience viewing the ad.

“A CTR is not a KPI (key performance indicator),” said Anya Cheng, Group Manager Mobile Product at Target; “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’

Slightly over a year ago, Facebook partnered with Datalogix 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.

I do not intend to disqualify the implications of a CTR (particularly because it’s one of the only data points we have) or to discourage strong calls to action on mobile. I simply intend to communicate that clicks and conversions provide an incomplete, one-dimensional picture of an ad’s broader mission. More importantly, brand marketers who only focus on performance indicators related to CTRs and purchase conversion are failing to be attentive to the branding experience of more than 99% of their ad viewers. That is lamentable.

Would you consider investing in mobile banner advertising after reading this post?