Click through rate(CTR) is the backbone of Internet Advertising. Although other metrics are being considered like the impact of indirect response to an Ad, agencies and marketers use click through rates to calculate the immediate impact of Advertising.
Formula
CTR = (Clicks/Impressions) x 100
Clicks: Number of times an Ad is clicked.
Impressions: Number of times an Ad is viewed
What is a Good Click through rate?
We normally use click through rates for PPC(Pay per Click) campaigns and Google being the market leader, our focus should be on Google Adwords. An average CTR would be in the range of 2-5% if your Ads are displayed on Search Networks. But if you are using the Ads in Content networks, the click through rates are likely to go down to 0.2 to 0.5%.
Low Click through rates and its Impact
Low click through rates doesn’t necessarily mean a poor copy or poor brand perception. Click through rates tend to be higher for low value actions like Downloads, Newsletter Sign-Ups and User Registrations. If you are selling products/services online then the CTR depends on the relevance and density of the keyword, placement of the Ad and the market you are competing in.
CTR in other Marketing Channels
Apart from Advertising, Click through rates is also used in:
Organic Search Results: CTR in organic search results are used to measure the impact of SEO effort. What is the difference in Click through rates of search results in the first and second position? According to AOL’s leaked data in 2006, the difference in CTR between first and second position is nearly 30%. Although it is a long-term strategy, focusing your efforts on SEO will give a better return on your investment than spending your entire marketing budget on PPC campaigns.
Social Media tends to have high click through rates especially Twitter when compared to Facebook. But Facebook is more effective in building a brand or for sharing the latest about your products and services. Twitter with its inherent model of short messages and click friendly bit.ly links has resulted in more CTR but the quality of leads from Twitter tend to be lower in most industries. Social media is a relatively new media and CTR is one of the many metrics used in them. Retweets in Twitter and Shares/Likes in Facebook tend to give us an overall impact of our campaign.
E-Mail Marketing: Organic search results are the best channel for getting leads followed by E-mail campaigns. Although spam filters have made it much tougher for marketers to spread the word about brands, the average click through rates in E-Mail campaigns tends to be in the 3-5% range, much better than PPC campaigns (2-5%).
Unless your Goal is to build a sizable audience (brand awareness) in the short-term, PPC CTR in isolation doesn’t add any value. Companies should focus on conversions instead of CTRs.
Action Steps to improve CTR in PPC Campaigns
Let us assume that you are looking to improve PPC CTR and you have also taken care of conversions. Here are some steps that you have to keep in mind while optimizing the campaigns for CTR.
1. Measure CTR for every 1000 impressions.
2. If the CTR is below 0.2% for every 1000 impression then review the Ad Copy, the content network and the demographic.
3. For the Ad Copy, revise the heading, the call to action and the use of keywords in the description.
4. The content networks where your Ad Copy is being displayed should be reviewed. If the CTR is below 0.1%, then enable the campaign only for Search Networks.
5. Keywords are the most important aspect of a PPC campaign. Searchers have a bias towards clicking Ads that are keyword rich but don’t make it look like a Spam.
6. Is the demographic that you are targeting getting your message? Test with multiple Ads on specific countries and age groups. Find the optimum list of keywords that resulted in increased CTR. Reuse the keywords in your campaign.