Click Through Rate (CTR)

Click through rate (CTR) is one of the key metrics used to measure the performance of paid search campaigns. Before I discuss this topic, it is useful to get a definition of CTR from Wikipedia…

“A CTR is obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%”

You may ask why this is important seeing as you do not have to pay for impressions in paid search. The reason is that Google, and later this year Yahoo, reward ads with higher CTR by lowering the average CPC. To what extent or by how much is intangible as there are several other factors they take into consideration, such as landing page and keyword relevancy. So, the onus is on the advertiser to have relevant keywords triggering relevant, well targeted ads.

Typically a brand term will have the highest CTR (anything between 33% and 100%) with generic terms having anything from 1% – 3% click through. As the search providers emphasize the importance of a good click through rate it can cloud your thinking when optimising your campaign. Moreover, clients looking at a weekly report will wish to see a high click through rate for their campaign.

However, the most important metrics should be Return on Investment (ROI) and/or Cost per Acquisition (CPA). For example, it may be tempting to pause a generic key term to bolster the overall CTR of an account, particularly as these get the most impressions and so can skew the overall results. However, in doing this you may be restricting the number of potential conversions from that keyword.

You should also consider the branding value from having thousands of impressions from a generic keyword. One of our recent clients temporarily paused their PPC account and noticed that their overall sales dropped substantially. Most of these sales were from customers phoning up after coming to the site from PPC and an educated guess would deduce that many of these customers probably came in from a generic term. So, when assessing an account’s CTR it is important to assess it at least at adgroup level, rather than account level. If the ad groups containing long tail, brand, etc. all have a poor CTR, then the account is being poorly managed. But if the account has relatively high CTR’s, apart from on generic terms, then it is safe to say the account has been well optimised.

Simon
Campaign Executive