What Ratio Do You Value?

jayeff · 2007-03-05, 09:45 AM

Conversion ratios are almost totally meaningless:

Because of differences in the way sponsors record their stats, at the very least you would need to compare sales against click stats of your own.
Why should conversion ratios be consistent when promotions run from freebies to high-cost products and cover everything between?
What do conversion ratios tell you unless you relate them to income: particularly with recurring programs?
If you want to see just how meaningless conversion ratios are, stick up a blind link in a prominent position. Your conversion ratios will go down the toilet, but your income may actually increase.

People focus on conversion ratios, no matter how many times they are said to be near useless, because they can. And hey, better to be doing something and better still if it's easy. The only relationship which really matters is earnings per impression, because two things determine your income: traffic and the effectiveness of the promo spots you display to that traffic.

Unfortunately, it isn't a simple calculation. You should reasonably expect prime promo spots to perform better than secondary ones, big promos to do better than small. Thus you cannot say I showed Sponsor A's promo the same number of times as Sponsor B's, but earned more from B, therefore he is better. You need to either figure out a balancing factor or compare the results of sponsors to whom you have given a similar "quality" of exposure (ie one group for those to whom you gave a space of their own at the top of your page, another for those appearing only in a list of links, etc).

Not straightforward, but then why track stats at all, unless they actually mean something?

2007-03-05, 09:45 AM	#9
jayeff Just because I don't care doesn't mean I don't understand! Join Date: Sep 2006 Posts: 95	Conversion ratios are almost totally meaningless: Because of differences in the way sponsors record their stats, at the very least you would need to compare sales against click stats of your own. Why should conversion ratios be consistent when promotions run from freebies to high-cost products and cover everything between? What do conversion ratios tell you unless you relate them to income: particularly with recurring programs? If you want to see just how meaningless conversion ratios are, stick up a blind link in a prominent position. Your conversion ratios will go down the toilet, but your income may actually increase. People focus on conversion ratios, no matter how many times they are said to be near useless, because they can. And hey, better to be doing something and better still if it's easy. The only relationship which really matters is earnings per impression, because two things determine your income: traffic and the effectiveness of the promo spots you display to that traffic. Unfortunately, it isn't a simple calculation. You should reasonably expect prime promo spots to perform better than secondary ones, big promos to do better than small. Thus you cannot say I showed Sponsor A's promo the same number of times as Sponsor B's, but earned more from B, therefore he is better. You need to either figure out a balancing factor or compare the results of sponsors to whom you have given a similar "quality" of exposure (ie one group for those to whom you gave a space of their own at the top of your page, another for those appearing only in a list of links, etc). Not straightforward, but then why track stats at all, unless they actually mean something?