Paid Search

Why PPC Click-Through-Rates Have Increased

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You may have noticed that the paid listings on Google have increasingly taken on the appearance of their organic cousins over the past few years.

Whereas previously pay-per-click adverts were clearly distinguishable by their blue backgrounds, they are now set against an almost transparent yellow. Anyone who works off an LCD screen will have no doubt at some point found themselves squinting from all different angles to try and figure out whether a search result is in fact paid or organic.

Clearly marked titles of ‘Sponsored Links’ used to sit above the PPC adverts both at the top and right hand side of the page but Google has done away with these also.

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The transformations do not stop there either. Previews, ad extensions, social stats and site link extensions – all of which were previously exclusive to organic results – have been added to PPC adverts. You can also pull the first line of the PPC advert into the headline (as seen in the Debenhams position one listing, above right).

As the above image shows, these changes mean that PPC adverts can now appear much larger and therefore have more chance of catching the user’s eye. Ultimately the result of this is that paid listings now closely resemble their natural counterparts.

Far from being insignificant aesthetic changes these modifications have had a massive effect on PPC click-through-rates (the percentage of clicks an AdWords advert receives from the number of impressions). At Search Laboratory, in 2011, we downloaded all of our click data from all of our campaigns from the last year. We then did the same for all of our campaigns in 2012 – and the results are startling.

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In the space of a year the average click-through-rate for paid position one more than doubled from 4.792% to 11.09% (pictured above). In fact the average click-through-rates for positions one to 10 all saw considerable increases in 2012 from 2011. The full data from Search Laboratory’s PPC campaigns is available here.

This wasn’t just a case of us getting better at PPC, we’ve been handling successful campaigns for years, this was a direct result of the changes to the appearance of the PPC adverts. The above image shows the average position one click-through-rates for all of our campaigns in 2011 and 2012. This data was from lots of different campaigns, which crucially were all from commercial markets ranging from dresses to sheds to travel.

So does this jump in PPC click-through-rates mean organic search has decreased in importance? Perhaps, but make no mistake natural is still king. For example ‘dresses’, which is one of the most searched keywords in online retail, experienced nearly three times as much organic traffic as paid in the early part of 2013.

Ironically it is because of consumers’ preference with natural search that PPC has grown in status. Our data shows that by Google making paid results resemble organic it’s made them more popular with users and consumers, and in turn the search engine giant has made more money. Obviously Google is a business and as their title suggests paid adverts are worth more to the search engine than natural – providing they’re relevant.

It’s also important to remember click-through-rates vary from each campaign to the next. Brand and specific terms as a rule will have a higher rate than generic terms, while there is certainly no optimum rate to aim for. Incidentally the alarm bells should go off if your search agency is guaranteeing you a click-through-rate of X %.

But providing your landing pages and call-to-actions are optimised – if they’re not the whole PPC campaign is likely to be on a hiding to nothing anyway – then the increased click-through-rates means that there are more conversions to be gained and thereby a greater PPC return on investment.

 Why PPC Click Through Rates Have Increased

Ian Harris

Ian Harris is the CEO and founder of leading multlingual search marketing agency, Search Laboratory. He is a specialist in search engine marketing for global websites and has successfully helped companies such as British Airways, IBM, HSBC and Novell tap into new markets and take their websites abroad.
 Why PPC Click Through Rates Have Increased

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9 thoughts on “Why PPC Click-Through-Rates Have Increased

  1. While the content of this article is helpful, I have to disagree with the conclusion. Unless the increased CTR correlates with a decreased CPC it won’t have any impact on traffic. I’m assuming this CTR increase is across the board, so there;’s no reason to believe it will impact cost in any way, it will just help you hit your budget earlier in the day.

    1. Actually higher CPC also accounts to the fact that there are more competitors bidding higher for the keyword. In any case higher CTR is win for advertisor and everyone as the point of PPC is quick traffic conversion for most campaigns.

  2. @Ian, Google does everything to ensure better CTR. They experiment a lot & infact they even started rolling ads at the bottom of the scroll, because they found that people are clicking those ads too. I very much agree that the layout & the real estate they give to top 3 positions can help, but they alone cannot be the only reasons for CTR to improve. So does that mean that you havent tweaked your adcopies for the entire period? Is it possible to know how much did the QS increase during this period of time? Any idea on the number of competitors? were you running them in the Auto-bid mode? Did the budget remain the same for all the period?
    The reason why i am asking so many questions is, when i look at your data, the point it conveys is, if you are in positions between 1 & 5 you can definitely see a lift in CTR.
    @Larry, thanks for sharing the infographic, last year i had pinned it in Pinterest. Useful one.

  3. @ Ian, Do you have a similar study for 2012 – 2013? If so, how is the performance? can those insights be shared too?

    1. @deepu,
      It means you campaign is performing at 100% efficiency. Technically, for every impression it gets served, it gets a click.
      Note: Do check your Keyword for its impressions. You can see 100% CTR when your impressions is too low.