What is Click Through Rate – and Why Does it Matter?

15 Aug, 2019 Paid Search

Click-Through Rate, sometimes called CTR, is a digital metric that measures the number of clicks an ad receives per impression. CTR is a calculation where the number of clicks you have is divided by the number of impressions your campaign or keyword receives. If your keyword is seen a total of 1000 times, yet only 20 people click on your advertisement, your Click-Through Rate would be 0.02, or 2%. The higher the percentage, the more successful you can gauge your ad campaign to be.

This metric is helpful to give a company real data regarding the success of their organic and paid digital campaign. By paying attention to how people interact with your ads or campaigns, you can ensure that you are spending your marketing dollars wisely and in the way you want.

Why Click-Through Rate is Important

As online platforms turn to the pay-to-play model, ads, and the businesses behind them, are competing with each other to get in front of valuable consumers. As it becomes more and more challenging to get attention online, a click-through on an advertisement is an indicator of interest. This indication of interest can, therefore, be used as a measurement to determine the quality of your ad across platforms and how users are interacting with specific ads.

A high percentage or CTR means what you are doing is working for your intended audience. A low rate means that your team should rethink its strategy and try another approach. You may be getting a lot of impressions, but people aren’t clicking through like your company would like. By tracking your CTR, you can tweak your ad campaign along the way to hone in on what’s working with your audience and what needs to go.

How to Use CTR to Improve Your Advertisements

CTR is a great indicator for the quality of your ad copy. An ad copy includes things like headings, description text, and the display URL. The ad copy can also include extensions to links, review statistics, location information, and other useful components. If your business has a poor Click-Through Rate on an ad campaign, your ad copy could be one of the first things that a digital marketing team looks to change.

Other areas with the potential to impact your CTR is the locations your ads may be targeting as well as the keyword relevancy to the ad you are placing. This all goes back to the idea of the ad copy and keyword bidding. The Click-Through Rate could be low because your keywords do not match the search query of the user. Therefore, the user is clicking on another more relevant ad. The location of your ad on the search page is also important. If you are lower on the page, because your average position is lower, you will receive less clicks and your CTR will be lower as well.

Click-Through Rates are not the end all be all for determining paid digital marketing success. It is a useful tool to use to understand your strategy and how it interacts with the demographic you are trying to appeal to. By establishing yourself in front of consumers with tested campaigns, you have better chances than if you did not utilize this helpful metric.

 Why CTR’s Are Worth Using

As your business grows, anything that can help you understand your audience better can give you a step up over your competition. By utilizing CTR, you can see what advertising techniques work for your demographic, what does not, and you can slowly start to hone your ad campaigns until you get it right.

While Click-Through Rate is not the only useful metric a marketing team can utilize, it is a crucial element to a digital toolbox that can help a business understand its ad performance. By using this metric in tandem with other practices we have mentioned in other blogs, you can start to establish yourself among your competition as a business that understands what potential customers want or desire from your industry.