Understanding Click-Through Rate, its Importance and how to Calculate it

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Click-through rates (CTR) are highly regarded by search engines.

A search engine makes more money if more people click on its ads.

However, advertisers also care about CTR.

When a user goes to a search engine, they are seeking information and are trying to find an answer. There is something they want or need.

It’s great when you can tell what users are looking for when they use search! A decision has already been made and the search has begun for the item they need.

As an advertiser, the first step in fulfilling that need is to create a relevant paid search ad.

What Is Click-Through Rate (CTR)?

In its simplest form, click-through rate is the percent of impressions that led to a click.

A 0.5% CTR is what you’d get if your PPC ad received 5,000 impressions and one click.

CTR measures the relevance of your ad for searchers.

You may have one of the following:

  • Your ad is highly relevant to users since it has a high CTR.
  • Your ad is not being seen as relevant by users if the CTR is low.

The main objective of every PPC campaign is to encourage visitors to click through to your website and perform a certain action (e.g., buy something, request information, view specifications).

To improve your ad’s relevance and generate those desired actions, CTR is the first step in the process.

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How Do You Define a Good CTR?

How much of a click-through rate would be considered good? I am asked this question a lot by my clients.

PPC is a field in which the answer varies depending on what the situation is.

CTR is based on:

  • The industry you work in.
  • Those keywords on which you’re bidding.
  • Each campaign is in a PPC account.

CTRs on brand-related keywords are not uncommon to be in the double digits when someone searches for your brand or the name of your trademark.

On broad, non-branded keywords, CTRs can also be under 1%.

Impressions vs Click-through Rate

How do Impressions Work?

When a user sees an advertisement, that is considered an impression (also called a view-through). An impression occurs whenever an advertisement appears on an app or website. Be careful not to confuse impressions with engagements.

What is the Importance of Impressions?

Mobile marketing relies heavily on impressions: the number of impressions that an advertisement generates is one way of purchasing advertising. 

Advertising formats typically charge by the Thousand impressions (CPM) model. For advertisers to understand campaign costs, knowing how many impressions a CPM advertising generates is crucial.

In the broadest sense, impressions serve as a barometer for the amount of exposure an ad receives. One of the easiest ways to determine how far an advertising channel reaches is to calculate how many impressions a campaign generates. 

In addition to generating Click-Through Rates (known as CTR) using the impressions a marketing campaign generates, marketers can generate other marketing metrics as well. A campaign’s effectiveness is determined by these metrics, but only an accurate impression count can prove it.

Calculating click-through rate

Clicks on unique links compared to all clicks

Despite the fact that the numerator of your equation is the number of times your audience clicks on an individual link, there are two methods for tracking clicks on individual links.

  • Click on unique links: Record each time a user clicks a link. In effect, the CTR will tell you how many people clicked on a particular link through an email.
  • All link click: Includes all email clicks, regardless of how many times the same user clicks. The CTR measures how many emails you send to “website visitors.”

Sent emails vs. delivered emails

Emails delivered are different from emails sent. It’s a small, but important distinction. CTR will always be lower or equal to using emails delivered when using the formulas using emails sent. 

Compared to bounces, the metric of emails sent does not account for bounces, and will therefore be higher. In the emails sent minus bounces, the delivered metric is delivered emails.

Both options work, but when it comes to measuring CTR, many marketers look to an equation that uses Delivered emails as their denominator, in order to ensure delivery issues don’t interfere with their analysis.

What is a Good Click-through Rate?

A controversial topic: what is an acceptable click-through rate?

Statistically, it depends. Yahoo offers some advice about what constitutes a good click-through rate:

As for the answer, “It varies.” Click-through rates inevitably fluctuate from campaign to campaign, depending on what keyword is being targeted. From your ad copy to its ranking on the results page, everything involved in the way your ad is displayed plays a part.

There is no magic number when it comes to clicking-through rates. Depending on your ad’s position, your expected click-through rate will differ by industry.

Google Ads has an average CTR of 1.91 percent for search ads and 0.35 percent for display ads. Averages are just that: averages. 

So, roughly speaking, the optimal Google Ads clickthrough rate is 4-5%+ via the search network or 0.5-1%+ using display advertising.

The goal should be as high a click-through rate as possible, as we mentioned above.

Unless you don’t.

Why higher Click-through Rates are actually Detrimental to your Business

High click-through rates for terms that aren’t relevant to your business or don’t generate sales, leads, branding gains, etc. are actually detrimental to your profits. Let me explain:

  • Every click costs you money.
  • The number of clicks generates a lot of advertising spend.
  • Sometimes, you generate clicks on keywords that are too expensive because even if they convert, they won’t produce a profit.
  • Keywords and clicks that are irrelevant are a waste of money that doesn’t bring in any additional revenue.

In other words, you should not always aim for the highest click-through rates: rather, you should target keywords that are:

  • Relevant – Necessary for your ad copy, landing page, and campaign offering.
  • Affordable – Keywords with minimal profit potential.

The key to achieving a good CTR is to first target the correct keywords, then get as many users to click on your ads as possible.

How to Maximize your Click-through Rates for your Ads

PPC campaign performance is influenced by:

  • Bid on keywords that are relevant to your business.
  • Clicks that are cost-effective.
  • Ad text and landing pages can be tightly integrated with keywords using tools and methodologies.
  • Segmenting keyword groups efficiently and quickly generating more targeted marketing.

You should keep in mind that a high click-through rate will likely lead to a high-Quality Score, and a high-Quality Score is one of the best indicators of success in PPC.

Email Marketing Click-through Rates

You can determine your email’s click-through rate by counting the number of recipients who clicked on at least one link in your message. You can figure out your email CTR percentage by multiplying the number of people who clicked by the number of emails delivered. 

 

Tools like UTM source builder can help you identify whether a user clicked on the link you sent in an email campaign. 

Don’t overcount clicks, of course. The clicking rate in most formulas is the number of people who click a link in your email, but what they really mean is how many people clicked any link in your email. In other words, if Bob clicks two links in the email, he counts as one click and not two.

Click-through rates can be categorized into two types: TCTRs and UCTRs.

TCTR

In email marketing, click-through rate (TCTR) refers to the number of clicks received by email links. The number of clicks a message generates indicates its popularity. 

This measurement is, however, influenced by several factors:

  • Multiple devices are being used to open email and links
  • Recurring clicks on links
  • Checking for malware by opening links through firewalls
  • Social media users clicking on links

UCTR

An email’s unique click-through rate measures how many times the link in the email has been clicked.

UCTRS eliminates some of the noise TCTR cannot account for by specifying unique link clicks.

In other words, when you open a message on your computer, open a link, and then click the same link from your phone, the number of clicks TCTR registers is 2, while the number of clicks UCTR registers is only 1.

For example, clicking on a link in the email in the morning and clicking it again in the evening would only count for 1 click for UCTRS but 2 clicks for TCRS.

Different scenarios require different measurements.

By measuring TCTR, you can see how many shares, repeat engagements, and retentions you are generating via email (e.g. UCTR will not reward you if someone visits your website 5 times in order to show it to their friends).

In contrast, UCTR can provide a detailed breakdown of the number of links visited by a specific individual.

If you want to find out how effective email marketing is at converting readers, this number may be more useful. A majority of ESPs measure UCTR rather than TCTR, since UCTR avoids the noise in TCTR.

UCTR will be our definition throughout this article.

What are the differences between click-through rate and other email KPIs?

To better understand the overall impact of your email campaign, consider and use click-through rate with other email key performance indicators.

In this article, we will address open rates, but we recommend that you also investigate conversion rates, bounce rates, and unsubscribe rates.

An open rate determines how many people open an email after it is sent.

It is common for marketers to optimize for open rate by changing subject lines to increase clicks, but over-focusing on this metric can lead to strategies that fail.

It does not give you an insight into the effectiveness of your campaign even if you have a great open rate. Even if your email was opened by many recipients, if none of them converted, or if none of them opened the links in your email, your campaign was ineffective.

Use open rate in conjunction with other metrics, such as click-through rate. This will help you pinpoint the areas where you need improvement.

The Click-through rate measures the total number of clicks compared to all subscribers; click to open rate measures how many times a click is actually opened. Only those recipients who actually read your email are considered in determining the effectiveness of your email. 

Therefore, CTOR does not punish you for unopened emails and isolates the effect of the actual email message from the impact of list composition, situational context, and subject line content.

The differences between CTR and CTOR will impact how effective your email campaign is.

How do you Calculate a Good email Click-through Rate?

It is important to focus on improving rather than benchmarking to determine where you stand among your competition. It isn’t necessary to be concerned about exceeding “benchmarks” if you’re constantly improving.

To properly evaluate the performance of your campaigns, you can (and should) always be aware of the average CTRs.

Comparison of Click-Through Rates and Conversion Rates

It is essential for digital marketers to measure both the conversion rate and the click-through rate to determine how effective their efforts are. 

The click-through rate indicates the actions users take before they get to your website (for instance, clicking your ad).

As a measurement of people’s actions on your website, conversion rates measure their actions at the middle and bottom of the sales funnel (MOFU/BOFU).

Here are some examples:

 

– Submission of forms

– Downloaded eBooks

– Products purchased

– And more.

Consider the case where I want to know how many people saw my Facebook ad and visited my website. Here, I would like to know my click-through rate.

I have a 7% click-through rate if 200,000 people see my Facebook ad, and 7,000 of them click it to visit my website.

This isn’t too bad!

Say I want to know how many people clicked my Facebook ad and became subscribers to my email newsletter. That is how I wish to measure conversions.

I generated 7,000 clicks on my Facebook ad and 80 subscribers registered for my email newsletter out of those that visited my website, which represents a 2.28% conversion rate.

Are click-through rates or conversion rates the metrics we should measure?

Optimizing one stage of the marketing/sales funnel versus another is a matter of preference.

Optimizing your click-through rate can improve the ranking of keywords in SERPs or increase traffic to your blog.

Measure and optimize your website’s conversion rates if you hope to increase the number of people who subscribe to your email newsletter, sign up for a free trial, or buy your products online.

Click-through rates can be improved by using these six actionable growth tactics

  • Get to know your target audience by conducting consumer research. Knowing what kind of messaging your target audience will respond best will help you target your messaging more effectively.
  • Make sure you target your audience by using keyword research tools. Also, consider the brand and negative keywords when conducting your research.
  • Write an enticing ad that highlights your brand and helps it stand out from the competition. Use power words to express urgency, authority, capability, advanced technology, scarcity, or proof of existence.
  • You should use high-quality, eye-catching photos in your ads; however, you must limit the amount of overlay text to 20% of your images.
  • Your landing pages should be in alignment with the copy, content, and design of your paid advertisements
  • Clearly state what your viewer can expect from your ad after he or she clicks

How to improve conversion rates with actionable growth tactics

A number of touchpoints between the middle and bottom have been identified in a marketing/sales funnel, analyzed, tested, and improved in conversion rate optimization. The following tips will assist you in optimizing your conversion rate.

  • Utilize visitor behavior, preferences, or interests to personalize your messaging and user experience.
  • Keep trying to convert visitors who do not convert immediately. Utilize retargeting ads to keep them interested by displaying services, products, or offers related to what they’ve shown interest in.
  • Customer support should be available during the entire purchase process. Visitors can ask questions on your FAQ page by chatting with a customer support representative, viewing tutorials and troubleshooting information or accessing real-time chat with a customer support representative.
  • Free materials are offered in exchange for contact information in order to convert website visitors into leads. Consider offering a white paper from your user, an instructional eBook, infographics that provide detailed data, or video content exclusive to your company.
  • Offer multiple conversion opportunities to website visitors. One in ten visitors to your website will make an immediate purchase after visiting it for the first time. Visitors who are hesitant can be presented additional conversion opportunities (also called micro-conversions), such as displaying a “smart bar” requesting they sign up for your email list or offering them a limited-time deal in an exit-intent pop up.
  • Testing your landing pages’ different elements such as hero images, call-to-actions, taglines, descriptions, button positioning, contact form format, and others should be done A/B.
  • Popular landing pages should include social proof. Consider adding testimonials from your customers, brand recognition from your previous ventures, or reviews and ratings from your mobile app store to your website or landing page. 

A Few Final Words

For PPC managers, understanding and monitoring the CTR is essential. The key to successful PPC campaigns is to optimize for both CTR and business metrics. 

About the Author

My name’s Semil Shah, and I pride myself on being the last digital marketer that you’ll ever need. Having worked internationally across agile and disruptive teams from San Fransico to London, I can help you take what you are doing in digital to a whole next level.

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