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What Is Click-Through Rate & Why CTR Is Important

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What Is Click-Through Rate & Why CTR Is Important

Search engines place a high premium on a good click-through rate (CTR).

After all, in the pay-per-click model, the more someone clicks, the more money that search engine makes.

But CTR is important to advertisers, too.

When a user turns to a search engine, they have a question and are looking for an answer. They are expressing a need or want.

What makes search so great is users are telling you exactly what they are looking for! They’ve already decided they need something and are now trying to find it.

Creating a relevant paid search ad is your first step as an advertiser in fulfilling that need.

This chapter will explain what click-through rate is, what a good CTR is, how it impacts your ad rank and Quality Score, and when a low CTR is OK.

What Is Click-Through Rate (CTR)?

Put simply, click-through rate is the percentage of impressions that resulted in a click.

If your PPC ad had 1,000 impressions and 1 click, that’s a 0.1 percent CTR.

As a metric, CTR tells you how relevant searchers are finding your ad to be.

If you have a:

  • High CTR, users are finding your ad to be highly relevant.
  • Low CTR, users are finding your ad to be less relevant.

The ultimate goal of any PPC campaign is to get qualified users to come to your website and perform a desired action (e.g., make a purchase, fill out a lead or contact form, download a spec sheet).

CTR is the first step in the process to improving your ad’s relevancy and generating those desired actions.

What Is a Good CTR?

So what’s a good click-through rate? Clients ask me this all the time.

The answer, as with many things in PPC, is “it depends.”

CTR is relative to:

  • Your industry.
  • The set of keywords you’re bidding on.
  • Individual campaigns within a PPC account.

It isn’t unusual to see double-digit CTR on branded keywords when someone is searching for your brand name or the name of your branded or trademarked product.

It also isn’t unusual to see CTRs of less than 1 percent on broad, non-branded keywords.

How CTR Impacts Ad Rank

CTR is not just an indication of how relevant your ads are to searchers. CTR also contributes to your Ad Rank in the search engines.

Ad rank determines the position of your ad on the search results page.

That’s right – PPC isn’t a pure auction.

The top position doesn’t go to the highest bidder. It goes to the advertiser with the highest Ad Rank. And CTR is a huge factor in the Ad Rank formula.

But Ad Rank is even more complicated than that. Google measures your actual CTR against an expected CTR.

So if you’ve run a lot of ads with a low CTR, Google will assume that any new ads you add to your Google Ads account are also going to have a low CTR, and may rank them lower on the page.

This is why it’s so important to understand the CTR on your ads and to try to improve it as much as possible.

A poor CTR can lead to low ad positions, no matter how much you bid.

How CTR Impacts Quality Score

Quality Score is a measure of an advertiser’s relevance as it relates to keywords, ad copy, and landing pages.

The more relevant your ads and landing pages are to the user, the more likely it is that you’ll see higher Quality Scores.

Quality Score is calculated by the engines’ measurements of expected click-through rate, ad relevance, and landing page experience.

A good CTR will help you earn higher Quality Scores.

When a Low CTR Is OK

Since CTR is so important, should you optimize all of your ads for CTR, and forget about other metrics, like conversion rate?

Absolutely not!

Success in PPC is not about Ad Rank and CTR.

I could write an ad that says “Free iPhones!” that would get a great CTR. But unless giving away iPhones is the measure of business success for me, such an ad won’t help my business become profitable.

Always focus on business metrics first, and CTR second.

If your goal is to sell as many products as possible at the lowest possible cost, then you should optimize your PPC campaigns for cost per sale. If your goal is to generate leads below a certain cost per lead, then optimize for cost per lead.

Unless your business goal is to drive lots of PPC traffic, CTR should not be your main KPI.

In fact, there are times when a low CTR is OK – and maybe even a good thing.

One of those times is when dealing with ambiguous keywords.

Ambiguity is a necessary evil in any PPC program. People may search for your product or service using broad keywords that mean different things to different people.

Here’s an example: “security.”

Let’s say you run a company that sells physical security solutions to businesses to protect them from break-ins. Your company wants to bid on the term “security” to capture users who are just beginning to think about their security needs. Sounds like a great strategy, and it can be.

But “security” can mean a lot of different things. People might be looking for:

  • credit card security
  • financial security
  • data security
  • home security
  • security guard jobs

And that’s only five examples I thought of in a few seconds. See how disparate those are?

Let’s say you decide to bid on “business security,” since it’s more relevant.

It’s still a broad term – and your CTR might not be great. But let’s also say you get a lot of leads from that keyword, at a good cost.

Should you pause that term because of a low CTR?

Of course not!

Always let performance be your guide.

Low CTR is perfectly fine, as long as your keywords and ads are performing well based on your business objectives.

Conclusion

CTR is an important metric for PPC managers to understand and monitor. Optimizing for CTR, while also optimizing for business metrics, will lead to successful PPC campaigns.


Image Credits

Featured Image: Paulo Bobita

CategoryPaid Search
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PPC 101: A Complete Guide to Pay-Per-Click Marketing Basics

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Melissa Mackey

Search Supervisor at gyro

Melissa Mackey is currently Search Supervisor at gyro, the largest independent B2B agency in the world. She's been doing PPC ... [Read full bio]

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