Digital Marketing

All About Click-Through Rate

One of the first metrics you learn about when you start advertising is click-through rate (CTR). It's a pretty simple metric, just clicks divided by impressions, but it can reveal a lot about your ad and audience so you should watch it closely. In this post, I'll give you a full rundown on CTR and explain just why it matters.

formula for calculating CTR

If you're only paying when someone click your ads, you may be wondering why CTR even matters. CTR matters because it can reveal a lot about the health of your campaign and it can affect the price you pay.

Click-through rate can reveal a lot about the health of your ad campaign and can affect the price you pay.

What It Reveals

A low CTR could indicate that your ad is irrelevant to your audience. For example, a Facebook ad for air conditioners will have a low CTR if it runs in the dead of winter because the audience won't be interested in it– they won't click. Similarly, Google search ad for the musical "Cats" will have a low CTR when the majority of searchers are looking for pages about actual cats.To mitigate this, expert advertisers watch their CTRs closely and are much more specific in their targeting to prevent running irrelevant ads.

On the other end, a high CTR could indicate that your ad is highly relevant to you audience, since they are click on it often when it shows.

Why It Matters

So what? Why does it matter that you have high CTRs and relevant ads? Because it helps you compete against other advertisers. Ad networks favor ads with high CTRs and will choose to display them over ads with low CTRs from higher bidding advertisers. That's because ads with high CTRs are relevant to their audience, which makes the presence of ads less of a nuisance and keeps the customer happy. Networks and publishers like that and reward you with more impressions at lower costs.

What's a Good CTR?

So is your CTR good enough? Like most answers in this industry, the answer is “It depends.” It depends on your vertical, the network you’re advertising across and especially the ad type.

Because so many factors should be considered, it's helpful to compare your ad's CTR to your other ads for that network (with similar targeting or copy). For example, if one of your AdWords search ads has a 1.5% CTR while your other AdWords search ads have a 1.0% CTR, then 1.5% would be good.

Average CTRs by Network

Generally speaking, search campaigns, like those on Google AdWords and Bing Ads, should have a CTR around 1%. Your performance can be much higher for branded keywords and much lower for top of funnel awareness keywords. AdWords Display campaign CTRs are closer to 0.1%. An average CTR on Facebook varies widely by ad type and can be anywhere from 0.02% for website ads in the right-hand column to up to 3% for Sponsored Stories. LinkedIn ads vary as well. Text Ads average around 0.025 %, but I've seen Sponsored Updates with CTRs as high as 1%.

To improve your CTR, check out these 5 Tips for Creating Effective Ads.

AdStage Team