What is Click-through Rate?
Click-through Rate (CTR) is an important metric not just in AdWords, but in pay-per-click advertising in general. Click-through rate is the ratio of the number of clicks and impressions. It is expressed in percentage.
Lets say an ad get triggered 10 times, and it got clicked 3 times. The CTR of this ad is (3/10), i.e., 0.3 or 30%.
Note: Click-through rate is a key performance indicator of both keywords and ads.
Understanding Click-through Rate –
I have highlighted some key points about click-through rate to avoid any misinterpretations.
- CTR measures the immediate response, not the overall reaction- CTR talks about the % of people who clicked on the ad right away to reach the destination page. It didn’t include people who failed to click on the ad then but visited the website later seeing the ad.
- CTR doesn’t measure the quality of clicks – A click can merely be out of curiosity which might not lead to a conversion. Hence a high CTR doesnt necessarily guarantee a good Conversion Rate or a low CTR doesnt mean a weak Conversion Rate.
- A good CTR leads to better Quality Score – Good CTR means that an ad is relevant to the searchers query. The relevance of an ad is an important parameter when Google assigns Quality Score.
Lets do a small exercise, consider 2 ads A1 and A2 for the same keyword. A1 has a CTR of 12%, whereas A2 has a CTR of 16%. Can we say the ad is performing better?
- Insufficient data
A beginner might look at the absolute figures and attest A2 as a better performing ad. But in reality, the data provided is not sufficient to answer this question. This is because click-through rate is highly dependent on the Ad Position of an ad. For an ad that is positioned on the top of the list, the chance of driving clicks is higher than the ad next to it or at the bottom of the list. Hence, to accurately determine what a good CTR is or to set benchmark standards, it is a must that the ads of same ad position are being evaluated.