What is Click-Through Rate & Why CTR is Important

What is Click-Through Rate & Why CTR is Important

Click-through rate (CTR) in online advertising, refers to the number of people viewing a web page who view and then click on a specific advertisement that appears on that page. Click-through rates measure how successful an ad has been in capturing users’ attention.

The higher the click-through rate, the more successful the ad has been in generating interest. It helps the advertiser website owner support the site through advertising dollars measured in cost-per-click.

A click-through rate helps digital marketers measure the efficacy of a variety of online marketing campaigns. It may be used with a variety of media, such as display advertisements, email advertising, and paid search.

PPC Click-Through-Rate

A high CTR is vital to the health of any advertising campaign, particularly campaigns run on Google. Google uses a variety of metrics to evaluate your site content and relevancy to Google users.

By displaying relevant ads, they keep the user base happy while also satisfying advertisers with a more receptive audience. Thus, to incentivize relevancy and quality, they provide higher Quality Scores to ads with high Ads CTR.

A click-through rate is the percentage of impressions that result in a click. If your PPC has had 1,000 impressions and one click, that is a 0.1% CTR. As a metric, CTR tells you how relevant searchers find your ad to be.

If you have a:

• High CTR when users find your ad to be highly relevant
• Low CTR, then users find your ad to be less relevant.

The ultimate goal of any PPC campaign is to get qualified users to come to your website and perform a desired action (e.g., make a purchase, fill out a lead or contact form, download a spec sheet). CTR is the first step in the process of improving your ad’s relevancy and generating those desired actions.

How CTR impacts Ad Rank

Ad Rank helps in determining the position of your ad on the search results page. The top position doesn’t go to the highest bidder; it goes to the advertiser with the highest Ad Rank- and CTR is a huge factor in the Ad Rank formula.

How CTR Impacts Quality Score

Clickthrough rate (CTR) is one of the three main components that Google Ads uses for calculating Quality Score.

Here is how they relate:

• Quality Score is a diagnostic tool that gives you a sense of how well your ad quality compares to other advertisers, measured on a scale from 1-10. A higher score means your ad and landing page are more relevant and useful to someone searching your keyword.
• Expected clickthrough rate (CTR) is the likelihood that your ad will be clicked when shown. If your expected CTR is "Average" or "Below average," it can indicate an opportunity to improve your ad performance.

To improve your CTR, you can edit your ad text to make your offer more compelling and ensure the details in your ad match the intent of your keywords.

When a Low CTR is OK

Users are finding your ad to be less relevant

Unless your business goal is driving lots of PPC traffic, CTR should not be main KPI.

There are times when a low CTR is OK and may be even a good thing. One of those times is when dealing with ambiguous keywords.

Ambiguity is a necessary evil in any PPC program. People may search for product or service using broad keywords that mean different things to different people.

Here’s an example: “Security.” If you run a company that sells physical security solutions to businesses to protect them from break-ins. Your company wants to bid on the term “security” to capture users who are just beginning to think about their security needs. It sounds like a great strategy, and it can be. But “security” can mean a lot of different things.

Decide to bid on “business security,” since it’s more relevant. It’s still a broad term, and your CTR might not be great.

Low CTR is perfectly fine, as long as your keywords and ads are performing well based on your business objectives.

When a High CTR isn’t OK

High CTR with a low conversion rate indicate a problem.

It means either your keywords are not a good match for your landing page, or your landing page isn’t converting well.

In this case, the campaigns listed have a strong CTR and lots of clicks, but few to no conversions.

We discovered that a large number of unrelated search queries were being generated by our keywords, bringing untrained individuals to the website.

It is never appropriate to consider CTR in a vacuum. It is one of many important variables to look at when determining if a PPC campaign was successful or not.

Conclusion

CTR is an important metric for PPC managers to understand and monitor. Optimizing for CTR, while also optimizing for business metrics, would lead to successful PPC campaigns.