Click-Through Rate (CTR): Understanding Click-Through Rate for PPC
Achieving a high click-through rate is essential to your PPC success, because it directly affects both your Quality Score and how much you pay every time someone clicks your search ad. Are your click-through rates holding you back, or are they high enough?
Click-through rate (CTR) is a metric that measures the number of clicks advertisers receive on their ads per their number of impressions. In this tutorial you'll learn:
- Exactly how click-through rate is calculated.
- Why click-through rate is important to your pay-per-click marketing account.
- Learn what constitutes a good click-through rate for PPC, and how you can get one.
So What Is Click-Through Rate, Anyway?
As mentioned above, PPC click-through rate is the rate at which your PPC ads are clicked. This number is the percentage of people who view your ad (impressions) and then actually go on to click the ad (clicks). The formula for CTR looks like this:
(Total Clicks on Ad) / (Total Impressions) = Click Through Rate
Generally, you can view your click-thru rate within the dashboard of your PPC account.
Why Do Click-Through Rates Matter?
Click-through rate is important to your account because it directly effects 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:
- High click-through rates lead to high Quality Scores.
- High Quality Scores allow you to improve or maintain ad position for 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.
What's A "Good" Click-Through Rate?
This is a hotly debated topic: what constitutes a good click-through rate?
From a purely statistical standpoint, it depends. Take a look at Yahoo's answer to the "what's a good click-through rate" question:
The honest answer to the question is, “It depends.” Click-through rates are naturally going to vary from campaign to campaign, and even from keyword to keyword. Everything involved in the way your ad is displayed plays a part, from your ad copy to the ad’s ranking on the results page.
So while you want to have a "high" click-through rate, there's really no magic number. Average click-through rate will vary by industry, and your expected CTR depends on your ad's position, among other factors. Generally speaking, as we mentioned above, you want as high a click-through rate as possible.
Except when you don't.
When Higher Click-Through Rates Are Actually Bad For Business
If a keyword isn't pertinent to your business or isn't going to generate sales, leads, branding gains, etc. then a high click-through rate for that term is actually bad for business. The reasoning for this is fairly clear:
- You're paying for every click.
- A lot of clicks generate a lot of ad spend.
- Some times you're generating clicks on keywords that are priced too high, and won't turn a profit even if they convert.
- Irrelevant terms and clicks are just spending money without bringing in additional business.
So you don't always want higher click-through rates: what you want are high CTRs on keywords that are:
- Relevant - Have to do with your ad text, your landing page, and your offering.
- Affordable - Keywords that aren't going to be profit-prohibitive.
So, in a nut shell, a good CTR means first targeting the right words, then getting as many people as you can to click on those ads.
Achieving Strong Click-Through Rates For Your Ads
Achieving strong click-through rates in PPC, then, depends on:
- Targeted keywords to bid on.
- Cost-efficient clicks.
- Tools and methodology for closely integrating keywords with ad text and landing pages.
- The ability to quickly and efficiently segment keyword groups to generate closer targeting.
Remember, the higher your click-through rate, the better your Quality Scores will likely be, and high Quality Scores are one of the single best predictors of success in PPC.