Ever wonder who clicks on the seemingly random ads on the Yahoo! Homepage? And why? You’re not alone, and Compete’s new research suggests that while many click, the value of any given clicker can vary widely.
The Yahoo! Homepage and other mega-site’s top-level domains reach the greatest audiences on the net and yield the highest advertising revenue. With millions invested in these single pages every day, they represent marquee virtual real estate, the online equivalent of Times Square billboards and primetime Network TV spots.
The graph above shows average daily unique visitors to homepages of the Top 5 ad-supported publishers. Some key takeaways:
- Unique visitors range from 8.6M — 54M
- Yahoo!’s Homepage gets more than 2.5X the average daily UVs of MySpace, the closest competitor
Like most premium inventory, homepage banner ads are priced on a CPM-basis. This practice obscures post-click performance, which can vary widely across campaigns and homepages, and leaves advertisers guessing about the true value of an ad, not just counting eyeballs.
As economic troubles worsen and marketing belts tighten, advertisers need to be more cautious with media spending and peel back CPM to see what a homepage is really worth. Compete compared a variety of campaigns at the Top 5 publishers over the course of a recent week in September to gauge homepage performance in terms of converting click-through.
The graph above shows the conversion rate of unique visitors who clicked on a banner ad at a Top 5 publisher’s homepage, and were then referred to the advertiser’s landing page. The conversion activity could take place on the advertiser’s landing page or site. Conversion activities varied by campaign, with some aimed squarely at a direct response, such as opening a new credit card, and others emphasizing a branded interaction, such as sending a branded text message via the web.
Some key takeaways from the graph above:
- The Top 5 publisher’s deliver conversion rates that range from 2 — 20%
- The traditional portals (Yahoo, MSN and AOL) deliver a conversion rate of 2 — 6%, with Yahoo taking the lead
- Social media giants YouTube and MySpace lead the Top 5 with conversion rates in the 18 — 20% range
Clearly, the Top 5 publisher’s split into two distinct categories: traditional portals with low homepage conversion rates and social media sites with high rates. What drives this 10X delta? Apparently whether or not the offer is free. Those banner ads which ran on portal homepages typically presented an offer to buy something, while offers on social media sites typically required just the visitor’s attention.
Portal banner ads included incentives to buy airline tickets or sign up for new brokerage accounts, like the Scottrade ad above (requiring a credit-check and trading contract). Social media sites, on the other hand, featured offers to compete in contests by uploading videos or download free toolbars/software, like the Spore Creature Creator.
If we control for the cost of offers, or lack thereof, there’s a wide discrepancy in post-click performance between peers. Yahoo, for instance, delivers a 6.0% homepage conversion rate, which is nearly 3x higher than MSN’s rate of 2.3%. As an advertiser, the best choice for a campaign will depend on a variety of factors, but with economic stakes rising, including the cost of ultra-premium homepage CPMs, so are the need for performance benchmarks that go beyond the first click.