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by Stephen Logan on 17th September 2009
What is a Click through Rate (CTR) and why is it Important?
In any PPC campaign there is something called a Click through Rate, often abbreviated to CTR. Essentially, this is the percentage of people who have seen your advertisement and have then chosen to click on it.
To take it back slightly, every time your advert is shown on SERP (search engine results page) it generates an impression. If a lot of people see your advert, thus creating a high number of impressions, but choose not to click on it, you may find that your campaign is adversely affected. More on this in a moment.
In order to calculate your CTR you simply need two figures; firstly the number of impressions, and secondly the number of clicks it has received. From this you can generate a percentage based on a clicks to impressions ratio. Please see the diagram below for clarification.
As you can probably imagine, the higher a campaign’s CTR the more successful it is deemed. Whilst a decent number of impressions show that you have been bidding appropriately and are being used in search results, a low amount of impressions might suggest that the advert isn’t particularly relevant. This is where CTR provides a far clearer bigger picture on paid search campaigns.
Search engines will often favour advertising campaigns that are deemed helpful to its users; conversely, the opposite may also be true, with those who fail to gain a reasonable CTR being downgraded in the listings. A campaign that is performing well may even achieve a lower Cost per Click (CPC) as a result, which in turn can save you money.
What counts as a decent CTR? Well, that’s largely down to your campaign and the area that you’re targeting. Sometimes 5% might be the highest you can achieve, on other occasions it may be 25%. If you’re struggling to get 2%, then you might well want to make some alterations to your ad text or keyword targeting. A general solution is to refocus the campaign and target key terms that are very specific to your landing page, also make sure you do plenty of negative keyword research to drive down unnecessary impressions.
The Click through Rate may well be the most important statistic your PPC account provides (with the possible, and very obvious exception of your conversion count). When the CTR falls you know that you need to make changes or even pause a campaign. Likewise, when it does well, you may want to emulate it and further its success elsewhere. It is effectively a paid search success barometer.