PPC Performance Indicators: CTR

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Whatever online advertising campaign you are using to market your business, products and services, you always have to measure its effectiveness. One of the primary performance metrics when it comes to Pay Per Click Advertising is Click-through-Rate or commonly called CTR. But what exactly is CTR and how can it help you measure and improve your marketing efforts? Let’s find out.

CTR Defined

Clickthrough Rate is defined as the amount of clicks your ad gets divided with the total number of views. So if you have let’s say 100 views for a certain ad and you received two clicks, that means your CTR is 2%. In Search Engine Marketing platforms such as Google Adwords and Bing, you can determine your CTR based on keywords, ad variations, ad groups and campaigns. You can typically find the CTR column when you check your marketing platform’s dashboard.

PPC Performance Indicators: CTR

PPC Performance Indicators: CTR


Why Measure Your CTR?

There are three primary reasons why click-through-rate is important not just in maintaining your Google Adwords campaigns, but in getting the most out of it. These are as follows:

1. Increased Chances of Conversion

The more clicks you get towards your landing page or website, the more chances you have of getting conversions. We don’t want to just increase the number of impressions the ad gets, but further its chances of being clicked on. Very basic premise, right?

Let’s use an example to better emphasize the point. Let us say you have two ad copies called Ad Copy A and Ad Copy B. Based on the results, it shows that Ad Copy A has a CTR of 2% while Ad Copy B has a CTR of 5%. What does that mean? It means that Ad Copy B is more attractive to your audience and it makes them interested enough to click this ad and proceed to your landing page. Therefore, Ad Copy B drives more traffic to your website than Ad Copy A.

2. Reduce the Cost

Let’s use the example above. Assume that both ad copies spent equal amounts of money, assume $5, and received equal amounts of views, assume 100. For Ad Copy A with a CTR of 2%, the cost of each click is $2.50. As for Ad Copy B with a CTR of 5%, the cost of each click is $1. Knowing this, you can stop running Ad Copy A and instead focus your budget on Ad Copy B which spends less for the same amount of clicks.

3. Increase Quality Score

If you are using Google Adwords, you would know by now that having good quality score is very important. Quality score is based on a number of factors, one of which is the CTR. The higher your CTR, the higher your quality score, which will eventually lead to higher ranking, more impressions and lower cost.

Measure the Effectiveness of Your Ads with CTR

Some people think that the only way to measure the success of their advertising efforts is by computing their revenue against their costs. Seeing as Pay Per Click Advertising requires continues improvement in order to attain the best results, you have to learn to interpret the data that you have. CTR helps you choose which ads and keywords to keep, and which to replace. This in turn can increase your Return of Investment to greater heights.

Need help in improving your Google Adwords and Bing Ads campaigns? Ask us how!

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