Why Ad Clicks Are Dying
One of the truths you're used to hearing about online advertising is that you must increase your "click-through rate." Click-through rates are a measure of how many people click on an ad you've placed. Many online companies offer display ads, contextual ads, and even text-link ads. If you're relying on click-through rates as a measure of "user engagement" with your company, you're going to be in for a big surprise (if it isn't already obvious to you yet).
Some companies are slow to join the online advertising game. If you have never tried buying an ad online, you don't have a lot to unlearn. If you have been buying ads online, and have suffered through wacky conversion rates, here's why: click-through rates don't translate into user interest.
The Internet isn't like the physical world. When someone walks into Burger King, there's a really good chance they're buying a burger (or something else). When a user clicks on an Internet ad, it doesn't carry the same weight as walking into a store. People get click-happy. You don't know the user's intention. He could be browsing for sneakers. If you sell sneakers, he might click on one of your ads. Then, he mysteriously disappears. Why?
He wasn't ready to buy. Maybe he was just price shopping. Even if he comes to your website, it's not the same as physically walking into a brick-and-mortar store location. Even in real stores, you get loiterers, but the online world is worse. It's full of them. The risk-factor for being exposed is low. After all, it's all just pixels on a screen. It's not costing you anything (really) to have a person drop by your website and surf around.
These click-through rates (CTRs) hide the fact that not all users are looking for the same thing. By focusing on CTRs, you are ignoring user intent. Intent, not CTR, is the driving force behind whether your ads succeed or not. If a user searches for "buy shoes," then there's a good chance that he's looking to buy shoes. If your ad is optimized for the keyword "buy shoes," then you have a pretty good chance of making a sale. You have a better chance of making a sale if the user is looking for "buy Nike Free 5.0" or "Nike Free 5.0 on sale" and you have an ad optimized for these keywords. A click-through on that ad should be a guaranteed sale.
However, if a user is searching for "shoes" or "Nikes," it doesn't clue you in to why they are looking for "shoes" or Nikes." All you know is that they're looking for these things. If you think that they're ready to buy, think again. Users don't have one-track minds. They don't exist to provide you with sales revenue. Users could be looking for general information about Nikes, how they're made, or even general prices so that they can compare against other shoe manufacturers.
The benefit for you is that, according to Ari Jacoby, CEO of Solve Media, ad rates will come down in 2012 Jacoby believes that units aren't valuable if they're "below the fold" on websites. There's only so much space at the top of a website, and even then, a site isn't going to want to turn their homepage or header into a Las Vegas strip of banner ads.
If you target your ads to account for user intent, you'll get fewer page impressions, and fewer clicks on your ads. That's OK. You'll generate more sales. Let other companies burn through advertising dollars.