What is a good click-through rate?. This question frequently comes up during our AdWords Q&A. Before we get into the quest of finding out what a good click-through rate is, we have a few basics to revise.
What is Click-through Rate?
Click-through rate is the ratio of the number of clicks and impressions. It is expressed in percentage. Click-through rate is a key performance indicator of both keywords and ads. To avoid misinterpretation, I have listed down a few important points that highlight the extent and limitations of click-through rate.
- CTR measures the immediate response, not the overall response- CTR talks about the % of people who clicked on the ad right away to reach the destination page. It doesn’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 doesn’t necessarily guarantee a good Conversion Rate or a low CTR doesn’t mean a poor Conversion Rate.
- A good CTR leads to better Quality Score – Good CTR means that an ad is relevant to the searcher’s query. The relevance of an ad is an important parameter when Google assigns Quality Score.
What are the factors that affect Click-through Rate?
Like most of the metrics in internet marketing and AdWords in particular, click-through is also dependent on various other factors. Without a doubt, the ad copy is one of them, but it isn’t the only one.
The advertising network –
Most advertisers, when looking at CTR, overlook the fact that CTR for search, display & partner networks vary significantly. Search network has a higher CTR than display. And partner websites usually have a lower CTR than Google-owned websites.
The device –
Again, device level CTR is a metric that varies heavily. Devices like smartphones and tablets usually see a slightly lower CTR than laptops or desktops. This may, however, vary from campaigns to campaigns.
The industry –
The good click-through rate for each individual industry is different. An eCommerce website can expect a different CTR than a lead-generation website.
Location targeting –
Ads which are locally targeted can have a higher CTR than ones that are targeted globally. We have observed that for countless AdWords accounts localized campaigns have a higher CTR due to customers trusting a store near them.
The ad type –
A text ad might not work well as a persuasive ad, whereas it could be an effective informational ad. Likewise, an image ad might work well for an eCommerce website but not for a lead-generation website. An informational ad might drive a viewer curious and persuade them to click, whereas an acquisitional/promotional ad might not have the same impact.
Ad relevance –
When considering the content of ad you want to advertise using, it is a must to consider the relevance it has to the product/service you are advertising for.
Target audience –
If your ads are placed in front of the wrong audience, CTR will be low. Who do you want to see your ads? This determines CTR too.
The kind of keywords you select, it affects the CTR too. A unique keyword like AdNabu will without a doubt see a good CTR. Because it is not generic, it is focused and it doesn’t have competition. But how would a keyword like Quality Score guide or AdWords optimization software perform? They are generic, a lot of advertisers are using these keywords and CTR is distributed across the advertisers!
Average ad position –
Of all the factors, ad position is the top most factor that affects the CTR. You can’t expect the same performance from an ad that is the bottom of the pile as the one that is at the top.
Having brushed up on the basics, let’s not dive into finding an answer to this complex question:
What is a good click-through rate?
Even though most advertisers look at generalizing CTR and quantifying it, sane ones do understand that this quantification makes very less sense or no sense in most of the cases. Why is it so? Because of the above-listed factors! There are so many considerations, most of which are unique for each advertiser. One could assume all the factors to be at their best, then state a measure of CTR that is good. But that is not the case.
What one can do is take the industry benchmarks listed by popular advertisement management agencies as just a reference. The agencies publish this information which is an average of both low and high performing accounts. They also include the less spending accounts along with the accounts that are burning a lot of cash. You can’t just compare Amazon’s CTR to a local retailer who has just launched their store. There are so many such contradictions.
Yet, with a few meticulous considerations, an advertiser can derive a good click-through rate for their campaigns. One widely accepted and relevant consideration is the average position of ads. Based on the average position, generalization of good CTR makes some sense.
For average ad position between 1 & 2, 20% click-through rate can be considered good. For 2 & 3, 10% and for 3 & 5, 5%.
How to improve click-through rate?
- By improving ad relevance – This is one trained and tested ways to improve the click-through rate. Using techniques like Dynamic Keyword Insertion, enhanced ad image quality, catchy ad text and most importantly by choosing the right keywords.
- By improving ad position – If I have to pick one factor that can surely make a difference the click-through rates, it would be the average ad position. No matter the industry, product/service type, targeting, device and other factors, if the average ad position is good, your click-through rate will be good.
And I can already sense the follow-up question, what is a good average ad position, right? – We have a few elements to investigate before judging an average ad position to be good or bad. One important element here is the spend. How much are you paying to achieve or retain an ad position? We will discuss the ad position in detail in the next blog.