Why CPM and CTR Are Dead

Campaign planning and campaign metrics go hand-in-hand, particularly because of the importance of CPM (cost per thousand impressions). Traditionally, when marketers negotiate, plan and purchase campaigns, the CPM metric is a critical metric. But implicit in the CPM metric is the assumption that advertisers need to buy impressions by the thousands so that their ads will reach just a few potential buyers. The idea is that if you reach enough people, you’re bound to at least get a few conversions. As has always been the case with advertising, you’ve got lots of opportunities to hit eyeballs, but no guarantees about how many will convert to buyers.

What this means, essentially, is that trying to reach a potential customer with display advertising is like looking for a needle in a haystack. The problem is you’re not just looking in the haystack – you have to buy the whole haystack first. In other words, you’re charged for every thousand impression, even if you only reach one (or zero) possible buyers.

Defining the Right Metrics for B2B

B2C advertisers are willing pay for thousands and even millions of impressions because even at a .07% click-through-rate, they’re driving purchases and gaining customers. But for B2B advertisers, it doesn’t matter how many impressions were served, it matters how targeted those impressions were. In fact, that’s why click-through rate (CTR) becomes such a perplexing and frustrating metric, especially for B2B markers. Like CPM, CTR has outlived its own relevance.

Unfortunately, while they provided us with an unprecedented level of precision, these metrics distracted us from the simple, intuitive calculation we relied on in days of yore: Are we making more money? At a time when technology is turning the world on its head, it’s easy to get caught up in tactics and details that don’t support our bottom-line business goals. That frenzy of activity can sustain you for a while, but it often backfires, especially in B2B advertising.

While publishers, vendors and technologists were busy optimizing for clicks and impressions, they created a situation where advertising is a “nice to have” but rarely seen as a critical element of any marketing or sales cycle.

Know Which Half of Your Marketing Dollars Are Wasted

For B2B companies, the selling universe is finite. So when you’re measuring the success of an ad campaign, the first thing you need to do is discount all the impressions and clicks that come from visitors outside your selling universe. Then, you can also forget about all the clicks and impressions that didn’t result in deeper website engagement. What that translates to is actually forgetting about clicks and impressions altogether.

Instead, you want to measure whether an advertising campaign resulted in increased website engagement by visitors from accounts sales actually wants to close. That means that instead of overall engagement by individuals, you’re measuring how much you’ve moved the needle for companies that have legitimate potential to become customers.

To plan and measure a successful B2B marketing campaign, you need to measure the following data:

  • What companies you’re targeting
  • How many of your target companies are seeing your ads
  • Whether the companies you’re targeting are increasingly engaged on your website

Companies such as Google and Facebook have recognized that measuring overall lift is the most meaningful way to track an ad campaign. Both these companies have different ways of thinking about lift, but for B2B marketers, the key is being able to link advertising to website activity and engagement. In B2B, you need to measure the overall account lift.

Although it’s hard to let go of old practices, as the entire marketing tech stack evolves, digital advertising will need to change, too. Otherwise, it will become increasingly irrelevant and decreasingly valuable.