What Click-Through Rate is – PPC Advertising in AdWords

In the world of Internet Marketing, CTR – Click-Through Rate (CTR) – is a standard of measurement that is used to calculate the clicks that the merchants are receiving on their ads divided by the impressions i.e. the number of times the ad was shown. It is through CTR that the performance of the targeted keywords and the ads can be measured.

A higher Click-through rate reflects positively on your Quality Score as well as on the rate that you pay every time an online shopper clicks on your search Ad. So to make Google PPC Advertising a success, it is necessary for the merchants to get a higher Click through rate.

In this post, you will learn about:

  • The best way to measure the click-through rate using CTR Formula
  • The main reasons that make CTR so important for your Pay-per-click (PPC) account
  • The main elements that make for a good Click-through rate and how to achieve it for PPC Advertising on

What is Click-Through Rate? Is there a Formula for it?

Click-Through Rate is the charge-per-click that you pay for your PPC Ads. Therefore it is the direct reflection of the percentage of people who actually saw your Ad and then clicked on it ‘with purchasing on their mind’. Yes, there is a formula which is quite simple too.

The following is the CTR formula that is used to calculate CTR:

(Total Clicks on Ad) / (Total Impressions) = Click Through Rate

Hence, if your CTR comes out to be high, it means that a good chunk of people who are seeing your PPC Ad are clicking on it. In your PPC account, you can have a look at your CTR within the account’s dashboard.

Why Are Click-Through rates Important?

CTR is deemed of great importance because it directly influences your Quality Score.

Google AdWords and other search marketing platforms offer pricing discounts for ads that offer high relevance (read: make searchers happy). One means for doing this is to offer higher Quality Scores to ads with high AdWords click-through rates:

It has been seen that if the ads are highly relevant to the queries that online shoppers are making, various search marketing platforms including Google AdWords offer pricing discounts. To achieve such a thing, one needs good Quality scores which can be easily elevated by making sure that the click-through rates are higher. Why? This is because:

  • Higher CTR means users are finding your ads relevant to what they are searching, therefore, higher CTR will lead to a higher quality score, and
  • High-quality scores further make it easier for the merchants to maintain ad positions even at lower costs.

Additionally, if you are advertising on relevant queries, achieving a high click-through rate means that you are driving the highest possible number of people to your offering.

Therefore a higher click-through rate means that you are succeeding in getting a higher number of clicks, and by using relevant keywords, you can also maintain it.

Now, what is considered a High CTR?

Giving one answer to this question is really difficult because, as of now, it is still a debatable topic. Even Yahoo’s answer to the question ‘what should be the CTR for a campaign?’ just says ‘it depends’. And true, the CRT not only depends on the way your ad has been displayed but also, on the rankings that your ad gets on the search page. And thus can vary from campaign to campaign.

Therefore there is no exact figure that can be deemed as a good Click-through Rate. Moreover, where average CTR tends to vary as per industry, expected CTR is known to depend on various factors like your ad’s ranking.

The following figure shows average CTR for 20 most common industries

It has been seen that the average CTR in case of AdWords for search and display is 1.91% and 0.35%. But since it is just an average, a good AdWords CTR can be anything between 4-5% when it comes to search and 0.5 to 1 % in case of display network.

Here is a calculator through which you can easily measure your CTR and can decide whether your CTR is lower or higher than the industry average:

Can Higher CTRs be sometimes bad for business?

Yes! A higher CTR can be bad for business especially if the keywords that you are using are not related to your business and are never really going to bring in sales. How? Here are a few reasons:

  • If you are ranking for the wrong or irrelevant keywords, it is highly unlikely that the user who clicks on the ad will actually buy anything. But since you are paying for that click, it is not generating any sales & therefore this type of ad spends is not at all profitable!
  • If you are ranking good for the right keywords, but their prices are too high, they are also not good for profits even if they are converting well.

Hence make sure that the keywords (that you are targeting) for which you want a higher CTR, they are:

  • Relevant: The keywords you are using for your ad text as well as landing pages should be as per the product(s) that you are offering.
  • Cost-effective: Prohibit the keywords which are of no use and hence are not contributing to conversions

How to Achieve Strong CTR for your PPC Ads

Higher Click-through-rates means a high-Quality score which is the direct indication of success in PPC.

But note that this all also depends on the keywords you are targeting, and how cost-effective your clicks are. And in the end, it all comes down to:

  • Your ability to target and use ‘more searched’ relevant keywords in your ads
  • Your aptitude to integrate keywords with the text in your ad and landing pages.
  • Your insightful use and creation of keyword groups for closer targeting.

Images – wordstream.com

 

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