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If your business is beginning to advertise online, you’re likely encountering lots of new metrics. Whether you’re managing ads yourself or receiving detailed reports from your partnered marketing agency, you need to know how to evaluate the effectiveness and success of your efforts. Our latest blog series will help you do that by addressing one term in depth every week. This week we are focusing on CTR, or Click Through Rate: CTR helps you judge the effectiveness of your advertising strategies, so here’s everything you need to know:
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CTR helps you judge the effectiveness of your advertising strategies, so here’s everything you need to know.
What is CTR?
CTR is one of the simplest metrics to understand, and one of the most important for gauging success. Click Through Rate is the percentage of people who have seen your ad or link, and clicked it. So if you run a Google ad that makes 1,000 impressions (that is, it shows up for 1,000 people), and it results in 20 clicks (20 people out of that 1,000 clicked the link to learn more), then you have a 2% Click Through Rating.
How do you calculate CTR?
This is an easy formula for calculating Click through rate. Take the number of clicks your ad received, and divide it by the total number of impressions/views. The result is your CTR. Of course that number will be a decimal, and CTR is expressed as a percentage. So remember to multiply it by 100 (just skip that decimal point two spaces to the right) to get your percentage for an accurate click through rate.
Why is Click Through Rate important?
There are several factors that make this metric one to watch.
1 | Helps gauge ad effectiveness
The goal of any ad is to put your business in front of potential customers. If you run ads specifically with the purpose of getting customers to take an action (like clicking a link to your website), click through rate tells you how relevant that ad is to customers who want to buy from you. Good CTRs on relevant keywords will lead to more sales and better traffic.
2 | Helps optimize ad spending
If click through rates are consistently falling below expectations, it indicates your ad isn’t as effective as it could be at bringing in new customers. It may be time to consider changing up your ad strategy or funneling ad dollars into a different keyword to see if it performs better.
Alternatively, high click through ratings aren’t always an indicator of success. If you sell auto parts but run an ad for free pizza, then you’ll have tons of clicks from people who want pizza, not auto parts. It’s important to focus only on keywords that are relevant to your business, and target an audience that is most likely to need what you’re selling. Otherwise CTR is just a number, and you’re throwing money away on clicks that won’t ever result in sales.
3 | Affects your quality score on Google, and cost per click
Google rewards people who make their searchers happy. Providing relevant results that people want to click on ultimately counts toward your Quality Score. Google uses quality scores to determine a number of things that can affect your visibility to customers, including where your links and listings show up in searches. Higher quality scores can also land you discounts on how much you pay per click, so a good quality score is highly desirable, and good click through rates play into that.
What is considered a good CTR?
Standards for CTRs vary by industry and keyword, and even the type of ad you’re running and on what platform, so there is no blanket guide for what you should aim for. That said, here is the average CTR by industry in 2018:
|
Google search |
Google display network (GDN) |
|
|
Advocacy |
4.41% |
0.59% |
|
Automobile |
4% |
0.6% |
|
B2B |
2.41% |
0.46% |
|
Consumer services |
2.41% |
0.51% |
|
Dating and personals |
6.05% |
0.72% |
|
E-commerce |
2.69% |
0.51% |
|
Education |
3.78% |
0.53% |
|
Employment services |
2.42% |
0.59% |
|
Finance and insurance |
2.91% |
0.52% |
|
Health and medical |
3.27% |
0.59% |
|
Home goods |
2.44% |
0.49% |
|
Industrial services |
2.61% |
0.5% |
|
Legal |
2.93% |
0.59% |
|
Real estate |
3.71% |
1.08% |
|
Technology |
2.09% |
0.39% |
|
Travel and hospitality |
4.68% |
0.47% |
Know your terms!
CTR is an important metric, and understanding it will help you gauge how well your ads are performing. Whether you’re doing your own online marketing or partnering with a firm, having a good foundation in the basics will ensure your success. Keep an eye out for future blog updates and more in-depth looks at industry terms by following us on social media:
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