Economics of the click

danah boyd looks at who clicks on online ads. Since click-through rates are miniscule (and falling), and since geeks block ads anyway, it’s an interesting and important question – who is actually clicking the things?

According to one study by AOL, “we learned that most people do not click on ads, and those that do are by no means representative of Web users at large...Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks.” danah goes on to speculate that this tiny group of clickers are unrepresentative of the online population as a whole - that they are essentially the same audience as responds to direct mail and telemarketing, i.e. a lower income, lower education, non-metro, female-weighted subset of the total online audience. 

Which has some interesting implications for online media economics. Publishers sell their ads on the back of demographic data. Much is made of the fact that site x has an audience composed of 75% ABC1 women and site y an audience of wealthy urban men. But if those people don't click the ads - if in fact it's just the same subset from the lower end of the socio-economic scale that's doing all the clicking, irrespective of the site, that's a potentially huge problem for display advertising.

Or perhaps there's no problem. The value of an ad is not just the click and much advertising is bought to build brand rather than generate a direct response. danah's conclusions are largely speculative and the post is upfront about the need for more data. However, it's an interesting question and one that merits further investigation - if click-through rates are so low, just exactly who is it that creates those few clicks?

Comments

[Helen]

Hasn't the model for 'traditional' advertising - print, tv, direct mail etc - always been that of the people you target, less than 1% will respond? In which case online advertising is no different.

[Helen]

Hasn't the model for 'traditional' advertising - print, tv, direct mail etc - always been that of the people you target, less than 1% will respond? In which case perhaps online advertising is not so different.