Do you still measure mobile ad campaign performance based on CPC rate? What is your record? $0.05? $0.02?
It’s such a cliché to use CPC as a KPI for the campaign result. It’s understandable, unlike large companies, small business owners often lack experience on running digital ad and cannot afford to spend money on CPM, which can be very expensive, or even more so on CPA, which requires additional calculations, analytics and possibility to optimize ad campaign for better result.
It might sound weird but, the truth is, this “traditional” KPI metric fails to provide high-quality results and a true assessment of your ad campaign.
Just to refresh your memory on the meaning for the abbreviations used in this article:
1. Cost Per Mille (CPM), known also as Cost Per Thousand Impressions, refers to advertising bought based on impression.
2. Cost Per Click (CPC) refers to the actual price you pay for each click in your pay-per-click (PPC) marketing campaigns.
3. Cost Per Acquisition (CPA), also known as cost per action and pay per acquisition (PPA), is an online ad pricing model where the advertiser pays for a specified acquisition – for example a sale, click, or form submit (e.g., contact request, newsletter sign up, registration etc.)
Right, 10 years ago CPC was one of the most popular digital ad performance metrics. Advertisers were so happy to pay for clicks because it created the impression of real customers interactions. But CPC is actually disorientating. The problem is that it doesn’t give you any understanding of the campaign’s performance. It might make you feel better when you see low average CPC, but often cheap clicks don’t bring customers who buy.
The price of cheap CPC – Low viewability of your ad
Always remember, the lowest priced ads don’t always deliver the best results. When CPC is purchased at a low price your ad will be placed in ad spaces with less viewability or in apps that are less frequently used. This means that usually cheap CPC brings you to certain not-very-popular publishers that will display your ad somewhere at the bottom of the page.
There is a cool trend in the digital ad industry, which we all love, to narrow down your targeting audience by geolocation, gender, age, interest, OS etc. It sounds exciting – finally you will spend your budget advertising your brand to potential customers. However, specific targeting settings and low maximum CPC rate is an extremely dangerous combination. Very often the available inventory is too limited and expensive, leaving you with bad performance results because bids simply cannot be won, and ads are not displayed.
The risk of cheap CPC – Click Fraud
Optimizing your campaign for cheap CPC increases the risk of fraud. Just in 2018 alone, almost every 4th click on cheap mobile ads were fraudulent. The reason why this number is so high is that many players of digital ad supply chain make a lot of money from fraudulent activity.
The fraudulent traffic can appear from different sources: it might be click bots, publishers who want to earn more, your competitors that want to drain your budget, and even random people who accidentally (or not) click on your ads – so-called the fat finger problem. A relatable study found that 60% of smartphone users have accidentally clicked on mobile ads – let’s be honest, that also has happened to you. 😉
Proving click fraud can be very difficult, since it is hard to know who made a click and what their intentions are. Adello AdCTRL AI analytics determines abnormal metrics that can hint at the presence of different types of frauds, such as:
- IP address: As bots run similar scripts from the same server, any click fraud on mobile ads will indicate a high density of clicks coming from the same IP address or a range of similar IP addresses.
- Click Heatmap: Click heatmap shows where the user or bot clicked on the ad. As bots are often programmed to click on the middle part of the banner the click heatmap can easily point on the fraudulent IP to block.
- Click Timestamp: Click timestamp shows the time at which the click is made on the ad. The bot-based click fraud runs repeatedly to attempt clicking on the ads, which increases click frequency for that duration. A high range of clicks with almost similar timestamp points adds to the possibility of click fraud. A low duration and high frequency mean a high probability of fraud.
- Action Timestamp: Action timestamp is the time at which the user engages with the app or website. As bot clicks on the advertisement and then performs the action on app or website without any delay, AdCTRL blocks a low or almost no action timestamp.
Yes, good fraud prevention systems can block all fraudulent publishers and IPs, but this can increase your CPC price.
Disadvantage CPC as campaign performance KPI metric
If you still want to chase the cheapest CPC, at least you should stop using it as your campaign goal and judging your performance based on CPC price. CPC is a useless metric, since it’s likely killing your bottom line.
The main problem is that CPC shows neither number of high-quality impressions nor real customer’s engagement rate. If you base just on CPC, you will never be able to adjust your ad for better result.
The best way to run mobile ad campaign successfully is to take other metrics into consideration and play with their settings. With digital ad SaaS platforms, like Adello Direct, it’s easy and fun. Take full control of your mobile ad campaign and make your brand successful without additional spending.