CTR (Click-Through-Rate) is a term used about the percentage of exposures / impressions that are converted to a click on an ad, or equivalent.
CTR is used when talking about advertising on Google and Google partners. CTR is valuable in terms of having to assess whether one's ad or keywords are effective. We want as high a CTR as possible and there are several reasons for this:
- A high CTR means, as mentioned earlier, that your ads are effective, as are the keywords associated with that ad.
- When we talk about Google Ads, Google uses the term Quality Score (see the article on Ad rank). Google uses CTR in their algorithm to calculate quality scores and scores. With a high CTR, you can get a better score and thus also get higher up, without having to bid more on your keywords.
How is CTR calculated?
It was previously described that CTR is the percentage of exposures / impressions that were converted to clicks.
The calculation looks like this:
If your ad is shown 1000 times and out of the 1000 impressions comes 100 clicks, your CTR will be 10%.
So 10% of all the views (1000) are converted to clicks.
So what does this mean for your business? When is your CTR high enough to conclude that your ads and keywords are effective?
This can be debated. Some would say that one's CTR should be at 20% - others, not quite so much. An average is probably 3-5%. What one should be aware of, however, is that CTR alone is not effective enough to conclude from. In the end, it's all about getting a conversion! Whether it is a sale of a product, a call to a service, or something completely 3, then CTR must be used in the context of conversion.
You can, for example, have 2 ads with the same number of impressions (2000), where one ad gives 200 clicks but only converts once. At the same time you can have another ad with 100 clicks but with 2 conversions. So the first ad has a higher CTR with 20% and the last one with 10% - though with twice as many conversions. In the end, it's about crowns and ears, and whether the other ad sells better.
So to sum up, it is important to focus on CTR in relation to, one's quality score and efficiency. However, it should be used as part of a context and not just CTR alone. So use the options and numbers that your dashboard gives you to create a better and more accurate picture of your online business. Use it to make the right business decisions.