Click-through rate (CTR) is a commonly used term in Internet marketing. In basic terms, it is a metric that is used to measure the number of clicks an advertiser receives on their ads per number of impressions. Click-through rate is important because it helps you understand how well an advertiser’s keywords and ads are performing. In this article, we’ll dive deeper into CTR to help you better understand this important tool.
It’s no secret that advertisements are the backbone of marketing for any business. Before the Internet, determining the success rate of an advertisement was pretty difficult. In fact, there was no real way to figure out how a particular ad was performing. Essentially, the only way the effectiveness of an ad could be measured was by seeing whether or not it translated into sales. However, for companies that ran multiple ads, it was virtually impossible to tell which ones were offering the greatest results and which ones fell flat.
In today’s world of marketing, particularly Internet marketing, gauging the success of an ad is a lot easier. There are multiple tools available that marketers can use to monitor the success of their advertising efforts. Click-through rate is one of those tools.
What Does Click-Through Rate Mean?
In the most basic terms, click-through rate (CTR) is the rate at which ads are clicked on. It highlights the percentage of people who see your ads (impressions) and then actually click on the ad (clicks).
The formula used for click-through rate is rather simple:
(total clicks on an ad) / (total impressions) = click-through rate
In other words, click-through rate tells you how many people that have seen your ad have actually clicked on it.
What Click-Through Rate Does and Doesn’t Reveal
It’s important to understand what a click-through rate measures and what it doesn’t. Click-through rate measures the percentage of people that clicked on an ad in order to arrive at the ad’s destination site. A click-through rate does not measures the people who did not click on your ad, but arrived at the ad’s destination site later on as a result of seeing that ad.
Though click-through rate measures the immediate response to an ad, it does not measure the overall response to an advertisement.
There is an exception, however:
for ads that do not display identifiable information about the destination site, the click-through rate is considered the overall rate.
What is Considered a Good Click-Through Rate?
That’s a difficult question to answer. From a statistical standpoint, what is considered to be a good click-through rate depends. That’s because the CTR varies from ad campaign to ad campaign. It can even vary from keyword to keyword. There are so many factors that play a part in determining a good click-through rate, such as the copy that is used in your ad to the ranking of the ad on the results page. While the goal is to attain a high click-through rate, there really isn’t any definite number that is considered to be the “best”.
Why Click Through Rate Matters
Click-through rate offers a broad view of how well an ad is doing at attracting visitors to a site. A click-through rate matters because:
- It gives you a base of visitors that will potentially convert
- It helps gauge your success against competitors and between campaigns
- It aids in assessing the quality of an ad’s copy; particularly its call to action
- It can impact return on investment
Why Click-Through Rate Isn’t Important
Though click-through rate certainly offers important information, not everything about it is important.
- A click-through rate doesn’t necessarily translate to conversions
- It doesn’t reveal the quality of visitors your ads are receiving
- It can be comprised of clicks that are intended to be malicious
- The impressions aren’t always acknowledged by users, which means that the values are king of arbitrary
- It is based on other variables, including competition and bid
High Click-Through Rates Aren’t always Good
The generally belief is that a high-click through rate is always a good thing. In truth, however, it isn’t always good. If a specific keyword isn’t really pertinent to your business, or it isn’t going to do anything to generate leads or sales, then a high click-through rate for that keyword is bad for your business. Here’s why:
- You pay for every click on the ad
- Lots of clicks = lots of money spend on an ad
- Clicks may be generated on a keyword that it priced high, yet won’t do anything for your business