Why do people care so much about click-through rates?
A commonly asked question in pay-per-click (PPC) advertising is "what is a good click-through rate (CTR)?" There is no easy answer and it can vary greatly depending on channel, targeting, keywords, and more.
First, the basics of the CTR:
Defined: The number of clicks received divided by the number of impressions generated. For example, an ad that is displayed 1,000 times and receives 10 clicks has a click-through rate of 1 percent.
Channel differentials: Search and display channel results are very different. We tend to see higher CTRs in search because the searcher is looking for specific information, and is therefore more likely to click when they find it. With display ads, the viewer is passive - doing something else when the ad is served to them.
Why do people care so much about CTRs? The CTR can be an indicator of how relevant an ad is to the searcher or to the audience targeted. It can demonstrate interest in a product message or show what "resonates" with searchers. I also have a theory that there can be an ego factor with CTRs. The bigger the better, right?
Several factors can impact CTR on an ad, which is why there is no definitive answer to the question. A few of the factors to consider include:
There are some observed trends in the industry based on PPC managers' experience and the channel's own data.
Search: In a healthy account you will see CTRs vary depending on the type of campaign. For example, branding campaigns typically earn a much higher CTR than non-brand. Advertisers may see 1 percent to 7 percent for non-brand with brand ads being 3 percent and up. Consider the differences in each campaign, but focus on optimizing ads with a CTR less than 1 percent.
Display: Typically advertisers could see 0.05 percent and above, with retargeting campaigns' CTR as much as double the percentage of site targeting campaigns. Try to optimize any ads with CTRs lower than about 0.03 percent, if clicks are a consideration. Most of the time, display ads are used for branding so impressions are a more important metric.
Facebook: Facebook offers two different types of CTR. One is ad CTR, which is the percentage of times the ad or sponsored story is clicked on. The other CTR is the social CTR. This number represents clicks on ads shown with the names of the viewer's friend. Facebook reps have said that CTR is not important and have not shared an average or goal CTR. This seems to be counterintuitive since part of Facebook's algorithm is based on an ad's CTR. Many advertisers will see 0.020 percent to 0.040 percent on average, but I regularly see several CTRs of 0.063 percent and up to 0.5 percent. Focus on optimizing or pausing any ads with less than 0.02 percent.
LinkedIn: According to a LinkedIn rep, the average CTR for ads on LinkedIn is about 0.025 percent. I see that percentage on the low end and then up to 0.06 percent. Focus on optimizing or pausing anything under 0.018 percent.
Determining a good CTR is also common-sense marketing. Sometimes to increase awareness or achieve a goal, advertisers have to bid on less relevant or complementary keywords or audience targets. This can result in a lower than expected CTR. This happens. It's OK. The bottom line is if campaigns are achieving their goals in conversions, traffic, or branding, the CTR is only one piece of the data pie.
PPC image on home page via Shutterstock.
This column was originally published on June 26, 2012.
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Lisa Raehsler is the founder and principal strategist at Big Click Co., an online advertising company and Google AdWords Certified Partner, specializing in strategy and management of SEM and PPC for search engines, display, retargeting, and social media ad campaigns. Lisa has led strategy on dozens of PPC accounts and puts her experience into practice every day as a thought leader in integrating clients' search campaigns with ecommerce websites, behavioral targeting strategies, and web analytics. She has participated extensively in the local interactive community, as well as at national search engine marketing conferences. Lisa's recent speaking engagements include SES, OMS, MIMA, HeroConf, and SMX conferences, as well as numerous private and public training engagements. As a columnist for ClickZ and Search Engine Watch, she writes on the topic of paid search. Follow her on Twitter @LisaRocksSEM.
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