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What is CTR, and why is it important?

Click-through-rate (CTR) is an important metric for both advertisers and search engines. From a search engine perspective, it makes sense that the more people who click on ads, the more money they will make. In terms of benefitting you as a business – if a user clicks your ad at a higher rate than your competitors, you’ll be rewarded with a higher quality score, meaning you’ll pay less for each click.

The great thing about search engines is that users are essentially telling us what they want. If you create a relevant paid search ad and can provide what they’re looking for – then it’s likely they will visit your site and hopefully complete your desired action. That’s why CTR is a great measure as it’s telling you how attractive your ad is.

There are a few things to consider when it comes to CTR. We’ve listed questions our clients have previously asked us:

  • How do I know if a CTR is good?
  • How does it impact other metrics?
  • Is a low CTR always a bad thing?

We’ve written this guide to give you a better understanding of CTR and how it fits into your PPC campaigns.

What is Click-Through Rate, and how is it calculated?

We’ll start with the basics – what does CTR mean? It is the percentage of ad impressions that resulted in a click. To work out the percentage; you divide the number of total impressions by the number of total clicks and then multiply by 100. It might sound confusing, but here’s an example; if you have a PPC ad with 100 impressions and 10 clicks – that will make your CTR 10 percent. 

So, it tells you how relevant your ad is to user searches. If you have a high CTR, then your ad is likely answering search queries and is therefore highly relevant. If you have a low CTR, your ad is not satisfying many users and is less relevant. 

Your CTR will help to determine what you need to change in your ads to gain more clicks. The main goal of any PPC campaign is to engage more users who will complete your desired action (getting in touch or making a purchase etc). Your CTR is a great way of knowing where you need to focus on improve your ad relevancy.

What exactly is a good CTR?

Clients often ask if they have a good CTR, or what a good CTR is. Your ideal percentage takes time to determine, and not everyone will be aiming for the same average. As with most aspects of PPC – it depends on a number of factors, for example:

  • The type of industry you work in
  • Your set of keywords
  • Your goals
  • Individual campaigns within your PPC account
  • Your network 

Put it this way, a Google Shopping campaign is likely to have a much higher CTR than a display campaign – that’s not to say your display ad is bad, but more users are likely to click on an ad for a product with images and live pricing, on an item they are actively trying to find.

How does CTR impact Ad Rank?

While CTR is a great way of determining how relevant and helpful your ads are for searchers – it has other benefits too. 

Your ad rank determines where your ad appears on SERP. If you have a higher CTR, then Google will view your ad as more worthy of a higher position.  

It’s also important to remember that Google measures your current CTR against your expected result. If you’ve had multiple ads with a low CTR previously, then Google will expect that your new ads will gain a similar average. When taking steps to improve your this metric, Google will rank your ad higher.

How does CTR impact your Quality Score?

To determine your QS and cost-per-click (CPC), Google must estimate the overall user experience that your PPC ad will provide. You might have read our previous blog on Quality Score, where we mentioned that the click-through rate is one of these factors. 

Google measures your QS on a scale of 1-10, based on the relevance and optimisation of your PPC ad, keywords and landing page. Your QS is calculated by a search engines measurement of your expected performance – meaning an impressive click-through rate will contribute to a good quality score. 

With the recent removal of the average position metric – you can use absolute top and top impression metrics to understand the position of your ad on SERP. You can read more about this here.

Is a low CTR always a bad thing?

CTR is an important metric, but it’s not something you should be putting all your focus into – especially if that causes you to abandon other metrics like conversion rate. Although it is beneficial, a good CTR doesn’t always mean a successful PPC campaign.

Think of it this way, if you were to create an ad that said: “Click For Free Laptops!” then you would likely get a very high CTR. However, unless your landing page lives up to what you promise in the ad copy – then you won’t be profiting from your clicks.

Usually, your CTR will not be the key performance indicator (KPI) for your business, unless your primary objective is to generate more PPC traffic. Otherwise, your business metrics will come before your CTR.

For example; if your goal is to sell all your products at the lowest cost possible – then you should optimise your PPC campaigns for cost per acquisition (CPA). If you’re aiming to generate more leads, you’ll optimise by CPL, etc. If your CTR seems low, but you’re still meeting your main goals, then it is not necessarily a problem. If your keywords and ads are performing well based on your business objectives – then you’re on the right track.

A good click-through rate mainly comes down to relevance. If you create a well-structured account that answers searches queries – then you’ll most likely see good results. It is an essential metric for PPC managers to monitor, as long as they’re also optimising for business metrics. 

Get in Touch 

If you have any more questions or want to know how you can improve your CTR, then don’t hesitate to get in touch.

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