Everyone is talking about the response rate on mobile, how its so huge, so target, how mobile advertising is already working so well. I’m not going to be dumb enough to disagree with that, mobile is the wave of the future and anyone who gets into the space early (even now) has a huge advantage over those even a year from now. However, there is a dirty little secret that Mobile Networks don’t want you to know: that their ads don’t work as well as they claim, and maybe they’ve known this all along and are hiding this data.
A new study by GoldSpot Media claims that almost 50% of all clicks on static mobile ads are actually “fat finger” clicks. These aren’t just clicks from those who visit McDonald’s a bit too much, but from the general population who accidently click on the mobile advertisement and then close the app within two seconds. This means that they weren’t at all interested in the advertisement, but instead were just trying to exit or move around.
But wait. It get’s worse.
Using this metric, they are only demonstrating that about 50% of all users close the app after accidently clicking on the ad. What about the percentage of users who click on the ad, but don’t close the app? How many more people is that: that accidently click on a banner, but don’t close it immediately within 2 seconds? 50% is bad enough, but if you add another 10% perhaps, then suddenly the accidental clickrate is 60%. What if its actually higher?
This is bad news for CPC based mobile companies, because it means potentially as high as 60% if not higher of the ads clicked on via mobile are just not real clicks. The rate online via desktops is much lower, partially because of banner blindness and partially because people aren’t using touch screens and can’t accidently click as much. Even if a company is selling on a CPM, they are using click-through rates (CTR) as a metric to try to prove often how great the ads are performing, and purposely not having any sort of ROI tracking on the backend.
It actually gets worse.
According to CNET, some app developers, namely mega app-game creator Zynga, are actually banking on the fact that people have fat fingers. According to a story written by Donna Tam over there, Zynga has recently decided to make their ads much, much larger in order to increase the click-through rate on their mobile ads. Richard Greeenfield, an analyst wrote:
Yet, with Zynga’s key assets, employees, literally walking out the door, company guidance of essentially zero EBITDA in the back half of 2012 and its stock price having cratered, we believe the company is resorting to questionable tactics to drive revenue in mobile by having higher click-through rates.
The smaller screens get, the accidental click-through rate seems to grow exponentially. AllThingsD wrote in March that the clickthrough rate on the smaller the device is, the most likely you are going to click on an advertisement. They correctly point out that the smaller the device gets, the actual amount of ads that show on the screen goes up – and that in order to get away from the ads, you have to move the screen, often accidently clicking on the ads you were trying to get away from. They back this up by showing that while there is a higher click through rate on these devices, the actual conversion rate is much lower as the device gets smaller.
Facebook even addressed this on their recent earnings call, trying to brush aside the issue. Chief Financial Officer David Ebersman, when asked by a reporter how many clicks are accidental on smart phones responded:
I think on (your) question, I mean, there are inadvertent clicks on every platform for every company that shows advertising, so it’s just something for us to continue to be aware of and monitor, but I don’t think it’s a specific issue to Facebook, and I do think over time it’s the kind of issue we’ll be able to make good progress at managing.
This means that they actually know it’s a problem, but don’t want to address it, because it means something bad: that their actual click-through rate of mobile ads is highly inflated, that people aren’t interested as much as they’d want people to know, and that as much as half of their mobile revenue, if not more, is completely accidental and fake clicks.
Is this the end of the mobile ad revolution? Of course not. It just means that performance marketing mobile companies have a better sell than ever before: that by providing a performance guaranteed metric, they are the best “protection” against fake and accidental clicks. It means also that companies like Facebook, Zynga and Google need to start doing real research on clicks, working with companies to develop technology to address this issue before it becomes more widely known that not every mobile click is really a click.