Your Click-Through Rate (CTR) is one of the most important metrics to keep an eye on when managing and optimizing your campaigns. Achieving a high CTR is essential to your success, as it can directly affect how your ads rank and how much you’re paying per click.
What is Click-Through Rate?
To put it simply, CTR is the percentage of people who clicked on your ad (clicks) after seeing it (impressions). For example, if your ad is seen 100 times and gets 10 clicks, your CTR is 10%. A higher CTR means that a higher percentage of people are clicking on your ads. The formula is pretty simple:
(Total Clicks on Ad) / (Total Impressions) x 100 = Click-Through Rate (Percent)
Ok, But Why Does it Matter?
If you’re new to Pay Per Click (PPC) advertising, in particular with Google AdWords, you might be thinking, “Who cares!? My cost per click is X amount and I have a set budget. Shouldn’t I be focusing on the clicks that cost less?”
This was certainly something that crossed my mind when I was a PPC newbie. But the truth is, your CTR can have a pretty big impact on your costs and on your conversion rate.
How CTR Affects Your Google AdWords Campaigns
In Google AdWords, the Click-Through Rate on each keyword is one of the factors contributing to your Quality Score. Quality Score affects your Ad Rank and your Cost per Click (CPC).
Google is a business like any other. To attract new users and then retain them, they need to offer the best quality service out there. They do that by helping users find valuable information that’s relevant to what they’re searching for. Think about it… If you search Google for “dance classes near me” and all that comes up is a box office link to a Broadway show in NYC, you’re going to be frustrated.
Dammit, all I want is to find a hip hop class for my kid in our neighbourhood, I’m not tryna see West Side Story!
Would you click on that Broadway link? Not likely (unless you’re secretly dying to see West Side Story, I hear it’s pretty good). What if that nonsense kept happening? What if Google kept showing you “Chinese restaurants in Vancouver” when you’re looking for “Thai restaurants in Seattle”? Would you think Google was a very good search engine? Probably not. Would you keep using it? Nah, you’d probably Ask Jeeves instead.
So, Google’s way of keeping Paid Search Ads relevant is by assigning each of your keywords a Quality Score. There are many factors taken into consideration when determining your Quality Score, but Click-Through Rate is more heavily weighted.
OK, OK! But what does Quality Score have to do with my CPC?
In Google Adwords, you set your bid on a keyword. Each time a person searches for that keyword, you’re entered into an auction for ad space. You tell Google the highest amount you’re willing to bid and if you win the auction, congrats! Your ad gets served! But it’s not a straightforward case of highest bidder getting the prize. Google takes into consideration your Quality Score. If they determine that your keyword is top quality and highly relevant to what the user is searching for they’ll serve YOUR ad, even if you’re bidding less than your jerkface competitor.
That’s right! If your competition is bidding $10 for a click but their keyword is really crappy, you can still win the auction by bidding $1 on a really awesome keyword. And the lower your CPC, the more clicks you’re getting for your money.
How CTR Affects Your Facebook Campaigns
Facebook is like Google in that they want to attract and retain as many users as possible by providing a positive experience. Zuckerberg earns his billions from advertising dollars, but that business model wouldn’t be possible if everybody thought Facebook sucked. They’d all switch back to MySpace and poor Mark Z would no longer have an audience to offer potential advertisers.
But how does Facebook provide a positive experience to its users? Well, they know you’d rather be stalking your ex or creeping your crush’s public pics. But since they have to show you ads, they might as well show you cool stuff you may find useful. I mean, just the other day I found stunning polka-dot blouse from an adorable Montreal boutique that I would never have heard of otherwise!
But getting back to your campaign! Facebook has their own quality assurance system called Relevance Score, which determines what shows up in somebody’s News Feed. There’s limited space available, so Facebook only shows an individual what they’ll likely be most interested in. That means you’re competing for space in your potential customer’s News Feed. You’re competing against other advertisers AND competing against their friends’ photos and status updates.
In this case, instead of bidding on keywords you’re bidding on your target audience. A crappy Click-Through Rate in addition to low engagement (likes, comments, shares) tells Facebook that your ad isn’t very relevant to the people you’re trying to reach. If you have a low Relevance Score you’re going to have to PAY MORE to win that auction. And just like with Google, the opposite is also true! If your ad is highly relevant to your target audience, if it’s getting tons of clicks and engagement, your ad will be selected over the competition even if you’re bidding less.
How CTR Affects the Quality of Your Web Traffic and Your Conversion Rates
If your Click-Through Rate is crappy, then your ad likely isn’t very relevant. And if users don’t think your ad is relevant, it’s either not very informative or the audience you’re targeting doesn’t want what you’re selling (or both).
For this example, let’s go with the theory that your ad isn’t very informative. You’re bidding on the broad keyword “shirts” and your crappy ad text just says “Quality Shirts for Sale! We’ve Got the Best Shirts in Town” A potential buyer is probably thinking:
What the HELL does that mean? What kind of shirts? Could you possibly be more nondescript?!
So, this user is probably not going to click on your link. She’s most likely going to be more trusting of the highly descriptive ad below yours and other users are likely going to feel the same way. Hence, low CTR.
But let’s just say she decides to take a leap of faith! Maybe she decides to see what you’re offering after all, and she goes in for the click! She gets to your landing page and what does she find? Men’s cotton t-shirts in a variety of comic book character designs. Do you think she’s going to keep browsing? Do you think she’s going to make a purchase? No, because she’s a fashion-savvy lady and she likes frilly polka-dot blouses from girly boutiques. Patrick Stewart was pretty cool as Professor X, but she’s not tryna rock a Wolverine tee to work.
So what happens next? The user leaves your site without buying anything. You paid hard earned money for that click and all you got in return was a high bounce rate. The same thing keeps happening with other users. You’re spending money on clicks, they’re not buying, your cost per conversion goes through the roof, you get mad and think advertising doesn’t work because your ROI is nil.
OK fine, I get it, my CTR sucks! So how do I improve it?
Just because this fashionista is into peplum and bell sleeves, that doesn’t mean your comic book t-shirts aren’t awesome! You just need to refine your strategy a little bit. Try bidding on a more specific keyword. “Shirts” by itself is very broad and could mean anything. Instead, go with something that describes what you’re selling. “100% cotton men’s t-shirts” is a bit more descriptive, or how about “comic book t-shirts” and be sure to repeat that in your ad copy. Rather than telling people that you sell the best shirts, tell them what they can expect to see when they click on your ad. “Comic Book T-Shirts, Merchandise, & Apparel — Shop online for officially licensed comic book apparel from DC and Marvel.”
This way, you know you’re targeting people who are actually looking for what you sell, and they know what they’re going to see when they click through to your site. The quality of your ad traffic improves, your conversion rate goes up and you start to see a return on your investment.
What is a Good Click-Through Rate?
Well, the average CTR for a Google Paid Search ad is around 1.5%. But… that’s just average. And why be average when you can be awesome? In my opinion, you should strive for AT LEAST 2% but if you’re achieving 3-5% then you deserve a round of applause! For Facebook ads, I’d recommend aiming for 1% or more.