Click-through Rate (CTR)
Now working through virtually every possible channel, marketers now have more ads and campaigns to track than ever. Having accurate, informative KPI is key for growing successful campaigns and refining a marketing strategy to better engage a brand’s target audience. Click-through rate is a widely used metric for engagement.
What is CTR?
Click-through rate, commonly known by marketers as CTR, is the percentage of views or impressions that result in a click on an ad or link. Marketers use CTR as a foundational performance metric for gauging the effectiveness of digital ad campaigns at driving users to visit a brand’s website and move farther into the customer journey.
Since click-through rate represents the ratio of views to clicks on a particular piece of content, it can be used on a wide range of marketing programs, including display ads, search ads, social media ads, and also email marketing.
Because it measures an action rather than an impression, CTR can be a strong indicator of how well an ad is grabbing users’ attention and keeping it long enough to inspire potential buying interest. Achieving a high click-through rate is always among the key objectives for any campaign. However, it’s worth noting that click-through rates vary vastly depending on targeting audience and marketing channels. For example, banner ads for boosting brand awareness would have a lower CTR than paid search campaigns targeting relevant keywords. In general, it’s not uncommon for CTR to be below one percent for certain marketing campaigns.
What’s a good CTR?
Typically, the average CTR for display ads, which are placed on websites across the internet, was around 0.35%. The average CTR for search ads (which appear on search engine results pages through platforms such as Google Ads) is slightly higher at about 1.91%.
However, what makes a good click-through rate is highly dependent on your industry, niche and level of spending.
How do you calculate CTR?
Calculating your click-through rate on a given ad is simple. Divide the number of clicks by the number of total impressions in the same time period and you have your CTR for that ad.
Clicks / Impressions = CTR
While the calculation is simple, chances are you don’t need to calculate it yourself. It’s a common metric you can find on your campaign performance report provided by your digital marketing platform.
Click-through rate is sometimes confused with conversion rate, a different metric that measures the percentage of click-throughs that turned into a conversion (usually a sale).
Why is click-through rate important in digital advertising?
CTR is a metric that represents the portion of web viewers whom your ads convinced to take a concrete action—much more valuable than an impression. While some digital ads are designed specifically only to create brand awareness and develop recognition among a target audience, marketers usually want consumers to click their ads and visit their website, potentially to make a purchase. Click-through rate gives you a rough idea of how attention-grabbing your ads are, and can tell you whether your ads are connecting with your intended audience.
However, CTR does have limitations. For example, CTR cannot tell you much about a user’s intent when they click on your ads, and by itself does not indicate how effective an ad is at spurring customers to purchase. Click-through rate can give you an idea of whether an ad captures users’ attention, but it doesn’t explain why they clicked or what it is about your brand or advertising that connected with them.
Examples of how CTR is used
A basic example of how to use CTR by itself would be a marketer reviewing a display ad campaign for how well it gets users to click and visit the brand’s website. Comparing their CTR to the CTR benchmarks of the brand’s industry, the marketer might find that a particular ad doesn’t seem to be effective and is performing below average. Knowing that, the marketer could remove that ad and focus the remainder of their spending and resources for the campaign on ads that work better. The marketer might also use CTR to adjust the creative for an ad—images, headlines, copy, and calls-to-action (CTAs). All of these variables can influence a user’s decision to click.
As we noted above, click-through rate by itself is very limited in the depth of insight it can provide. To make CTR more useful, marketers often use it in tandem with other metrics such as conversion rate. For example, a marketer might analyze a campaign for both metrics and determine that while an ad seems effective at getting people on the website, those users don’t seem to be converting into sales. This would be a useful piece of information, as it could suggest that the website isn’t aligned in its messaging with the ads being clicked, and users are bouncing from the website when they realize the mismatch.
Conclusion
While CTR may not be a comprehensive metric for analyzing and understanding ad performance, it can be very useful in making decisions about future campaigns and refining existing ads to better attract customers. Used in combination with other metrics, such as return on ad spend (ROAS), click-through rate can help marketers build better campaigns, craft more compelling creative assets, and generate more sales.