November 20, 2014: Click-through rate (CTR), very simply, is the number of clicks your ads have received divided by the number of total impressions. Specific keywords as well as ad creative variations will all have individual click-through rates.
The Benefits of Having a High CTR:
- Your ad position is determined by your maximum cost-per-click (CPC) bid and by Quality Score – exclusively.
- For your ad to be eligible to be shown in the gray scale box that precedes search results, it must reach a certain Quality Score threshold. This is especially important because many AdWords extensions such as Sitelinks and Callout extensions are only available for results that are listed in the topmost positions.
- CPC is determined by factoring in your maximum CPC and your Quality Score.
“Expected” CTR Directly Impacts Quality Score.
This is based in part on your ad’s historical clicks and impressions. It also considers multiple factors including relative ad positions, what extensions you use, and which networks and devices you are showing ads on. Based on historical performance and the factoring in of all these variables, Google gives an ‘estimate’ of your CTR and modifies your Quality Score accordingly.
Making changes, internal (through your actions) or external (change in competitive marketplace), that create changes to your CTR will also change your expected Quality Score (day-to-day rises and falls will have little noticeable effect).
Truth Behind “Good CTR”?
- “Good” is relative.
- CTR does not exist in a vacuum.
- Your CTR is compared to that of everyone else competing for the same search terms.
- CTR is compared separately and normalized by position. A CTR that appears adequate out of the 6th position may actually be great compared to the field.
- Search CTR does not affect content CTR and vice versa.
Click-through rate is useful in measuring how successful you are at engaging a particular audience with a specific ad message, but beyond that, it does not necessarily translate to business results. See the examples below:
- Having very aggressive calls to action.
- Using bargain terminology such as “free” or “cheap.”
- Using primarily branded terms.
In these examples, your CTR may be through the roof – but it might not create the ROI or business results that you need.
When is it Good to Have a “High” Click-Through Rate?
When you are dealing with a relatively low amount of impressions.
- A 20% or 30% click-through rate might seem difficult to maintain and costly, but when you are only dealing with less than 100 searches per month for a niche market, it’s great. When the available traffic stream is very small you want to own as much of it as possible.
When you are dealing with a very narrow (and highly applicable) target audience.
- In B2B paid search, it is not about bringing in a large volume of traffic, rather it’s about bringing in highly qualified traffic.
When you are bidding on your competitor’s brands.
- People that are searching for brand names in a particular space are typically either current shoppers or existing customers. These are qualified and highly relevant searchers and if they don’t already know about what your firm offers, it presents a great time to introduce yourself.
If you are running a display campaign on a cost per impression model.
- The merits and pitfalls of CPM-modeled placement campaigns are to be discussed elsewhere, but assuming you are paying per thousand impressions, you would need to convert a large amount of them to actual traffic to make good business sense.
When you have an unlimited budget for click charges.
- In this hypothetical situation, CTR can be used to fast forward the accumulation of data. With more complete information, we can make decisions to benefit the campaign.
Whenever it’s profitable for you to do so.
- This is purposely vague. Assuming you convert visitors to measurable business results, then by all means, attract more visitors.
When is it not Necessarily Good to Have a High Click-Through Rate?
If your campaign is running on the Google search network.
- A little known fact about Quality Score calculations: Only your CTR for the Google search page comes into play in determining your Quality Score. CTR on Google search partners does not. The CTR you see in your dashboard and reporting is an aggregate of both (assuming your campaign is opted into search partners).
In a display campaign.
- More specifically, you shouldn’t think of cost-per-click as one of the major health factors in the content network as a whole. Look at individual placements on a case by case basis – a certain CTR might seem low, but the ads may be buried in the bottom of the page or the site may have a niche audience that doesn’t fit your product.
When it is causing your more important business metrics to suffer.
- “…but click-through rate improved” is never a good excuse.
When you are chiefly using broad match terms.
- We would have to analyze it on a case by case basis but most likely this means your call to action is very strong and you’re attracting tons of visitors from keywords and concepts that could probably be narrowed down.
When it is draining your marketing budget or daily budget.
- When dealing with slow moving and high impact deals, you are always looking to land a prospective client. This is impossible if your ads aren’t running.
When your keyword focus is laser sharp, and only then, should you try to capture as much search traffic as possible. CTR is one of the tools advertisers can use to determine whether or not their keywords and messaging are resonating with searchers, but should almost never be the sole indicator used to make marketing decisions.