Chapter 4: Reading Metrics, Not Calculating Them — Avoiding Vanity Metrics
1. Intro: Beware of “Vanity Metrics”
The most common mistake for beginners is focusing on numbers that “look big and feel good” but don’t drive business. Example: “We had 1 million impressions!” or “Our CTR is 10%!”
It’s like a chef saying, “1000 people smelled our food today!” The owner only cares: “How many actually paid for a meal?“
2. Trap 1: The Sweet Poison of High CTR
Myth: Higher CTR is always better. Case Study: The “Bikini and Gaming Mouse” Disaster. A company selling professional gaming mice ran two ads:
- Ad A: A photo of a model in a bikini holding the mouse. “Click for more.”
- Ad B: A technical teardown of the mouse. “16,000 DPI, Zero Latency.”
Results:
- Ad A had a massive 8% CTR. Men clicked out of curiosity.
- Ad B had a low 1% CTR.
Outcome: Ad A cost a fortune in clicks but had zero sales. The people clicking didn’t want a mouse; they felt tricked and left immediately. Ad B had fewer clicks, but every click came from a hardcore gamer who actually bought the mouse.
Lesson: High CTR without intent is just burning money.
3. Trap 2: Is Low ROAS Always a Loss?
Myth: ROAS must be above a certain number to be worth it. Case Study: The Revenge of LTV (Lifetime Value). A subscription pet food company sells a bag for 30 profit. Acquisition cost (CPA) is $40.
- Beginner decision: “We lose 30-$40). Shut it down!”
- Expert decision: “Users who buy once stay for a year and buy 6 more times. Total profit is (10 initial loss = $170 profit.”
Lesson: Some businesses make money on the “back-end.” Don’t kill a gold mine by looking only at the first transaction.
4. Trap 3: Is Cheap CPM Always Good?
Myth: I should use the cheapest money to reach the most people. Case Study: Putting Ferrari ads in a slum.
- Channel A (High-end financial news app): CPM $200 (Expensive).
- Channel B (Pirated movie site): CPM $5 (Cheap).
In Channel B, you reach millions, but they can’t afford the car. In Channel A, one click from one high-net-worth individual pays for the entire campaign.
Lesson: Traffic has classes. Precision is expensive but valuable.
5. Top 5 Metrics Beginners Misinterpret
| Wrong Focus | Why it’s wrong | What to watch instead |
|---|---|---|
| Follower Count | Followers ≠ Sales. | Engagement Rate / Conversion |
| Video Views | 3 seconds counts as a view. | Watch Time / Retention % |
| Clicks | Clicks don’t mean the page loaded. | Landing Page Views |
| Add-to-Carts | Adding isn’t paying. | Checkouts / Payment Success |
| Impressions | Could be 1 person seeing it 100 times. | Frequency |
6. Brand in Action: Pepsi’s $20M “Vanity Disaster”
Background: In 2010, Pepsi skipped the Super Bowl and put $20 million into the “Pepsi Refresh Project,” a social campaign where users voted on community grants.
Vanity Metrics (Looking good):
- 3 Billion Impressions.
- 3 Million new Facebook fans.
- Massive PR coverage.
The Reality: That year, Pepsi’s market share plummeted. For the first time, it dropped from #2 to #3 in US soft drinks (overtaken by Diet Coke).
Why? People went to the site to vote for charity, not to buy soda. They focused on “Likes” and “Votes” (Vanity Metrics) while ignoring the Conversion at the grocery shelf.
Insight: Marketing without conversion is just expensive charity.
Next Chapter: Chapter 5: Panorama of Online Advertising Formats. Search, Social, Video, Native… What are you actually buying?