Click Through Rates are a vital metric in understanding how well ads are performing and is directly related to how much Google charges for each ad. While it may appear complex at first glance, the concept itself is quite simple.
What Is Click Through Rate?
CTR, or Click Through Rate, is the percentage of those that click on an advertisement in relation to how many have seen it. It is essentially a measure by which to quantify how effective, and cost-efficient, an advertisement is.
Tracking online behavior is notoriously difficult, and businesses will likely need the services of experts in the field to truly understand how to improve specific aspects of their website. This, however, is not always the case. Click Through Rate data is easy to obtain and relatively simple to understand. Although that is not to say that it is a simple task of implementing campaigns and strategies based on the data.
Firstly, it is important to understand how the click-through rate is calculated. It is a simple formula, the number of people that clicked on any given ad, which is then divided by the number of people who saw the ad, times by a hundred. So if an ad gets four clicks per hundred views, the click-through rate is 4%.
Once you have an accurate picture of your data, you might want to know what makes for a good CTR. Well, that will depend on a number of factors. One of the most important would be the different types of ads.
Search, Banner, And Email Ads
Adverts online come in different forms, the main two being banner ads and search ads. Banner ads are those that appear at the sides or top of websites typically, although they can be placed anywhere, depending on how the website is designed. They are basically tiny billboards that try and grab your attention with flashy visuals and enticing offers. Banner ads were the staple of online marketing in the past, but many users find them distracting and untrustworthy. That is not to say that they have no use in modern online marketing, just that they are less effective than search ads for the most part.
Search ads are those that appear at the top of a Google search. They will have a small sticker next to the text informing you that it is an ad and they should be relevant to the search itself. More on that later. Search ads are five to six times more likely to garner responses than banner ads on average.
Email ads are links that are tracked to people’s inboxes. Typically, email ad CTR is calculated with more complex methods, with bounce rate, how often an email is sent, how often an email is opened as well as other metrics.
What Is A Good CTR?
Put simply, there is no simple answer to this question as it will depend on a range of factors that can not be easily summarized with a golden number. Almost everything you can think of can affect what represents a good CTR, industry, type of campaign, customers targeted, the value of product or service and object of the campaign.
One of the most important factors is the industry. The average click-through rate is .35% for banner ads and 1.91% for search ads, but as the table below signifies, these are great results for some and poor for others. There are online tools that you can utilize that can give you a broad yardstick for each industry, but beware, these are not always relevant to your specific campaign.
Other Important Metrics
It should also be noted that CTR is not the only measurement by which you should define a campaign’s success. As each click costs money, it is vital that the right people are interacting with your ad. For this, an understanding of the following terms is important:
- CPC – Costs Per Click
- CVR – Conversion Rate
- CPA – Cost Per Action
Cost Per Clicks, CPC, are exactly what they sound like, how much you are charged each time someone interacts with your ad. Unless the ad is being clicked on, you will not be charged. The cost of each click depends on a number of factors, more on those later, but you are able to set a maximum limit to each click.
The Conversion Rate, CVR, is the rate at which each click is converted into a relevant purchase. This is important because a high click-through rate and low conversion rate will likely leave a business out of pocket.
Cost Per Action, CPA, is essentially the same as the conversion rate but related to a specific action instead of the sale. This may be a registration or subscription, or some other interaction with your website that is relevant to your business.
How Costs Are Calculated
As previously mentioned, the cost of each click is not easy to predict and is informed by each keyword, its relevancy to your ad and how successful the ad is. This is partly because Google wants each ad to be as fruitful as possible as it earns money each time an ad is clicked upon.
For this reason, each ad is given a “Quality Score”, which is quantified by your Click through rate. Each ad is essentially a bidding process, which will relate to your maximum bid per keyword (search term). The better your quality score, the less your bid will be per search term showing up as either a search or banner ad.
How To Improve CTR
This all begs the question; how do you improve your click through rate? As with many things related to this subject, it is campaign, industry, and goal specific, but much of it is common sense. For example, make sure your ad is relevant to the keyword search term you are using. If you are advertising shoes, it makes little sense using keywords for skiing holidays.
For banner ads, make sure the visuals are striking without being garish if it does not suit your product or service. Neon pinks and yellows might grab the attention, but do not appear trustworthy if you are part of the healthcare sector. You can still use text-heavy ads for banners and these often convert at a higher rate than visuals.
Making your ads more specific may also help your click-through rate. This is particularly important if you are selling a product or service where there is a lot of competition. Instead of using the keyword “Shoes” one could say “Quality Leather Footwear”.
You can also add gimmicks, such as countdowns, to make your ads seem more urgent, and it does not require a deep knowledge of coding to do, as shown below.
This combined with special offers, free gifts and, if possible, reviews from trusted sources to your meta descriptions can all help draw attention to your ad and increase your CTR.
A high CTR is not always a good thing. As previously mentioned, if you have a high click-through rate and low conversion rate, it is clear something is wrong with your message. This costly mistake can, however, be rectified with some simple methods and tools.
Negative keywords are those that block your ad from appearing when related search terms are used. This can keep costs down while refining your customer interactions to the most relevant. For example, if the previously mentioned shoe shop only sells women’s footwear, it makes sense to use the negative keywords male or men’s. This prevents irrelevant searches from costing you money when clicked upon.
It is likely that no matter how well planned a campaign is, it will always have room for improvement. CTR is a trial and error endeavor, but by following some simple rules and maintaining campaigns, it is possible to cultivate the maximum income from the minimum cost.