If you want to get to really know your customers, investigate your click-through rate. But what is click-through rate (CTR), and what can it do for you? CTR is simple enough to understand, and provides much more information than its name suggests.
The Right Ratio
CTR is the ratio of how often people who view an ad take the time to click it. CTR can do more than just tell you the number of folks clicking your ads, it more importantly determines how well they’re working and performing. Broken down, the CTR reveals the number of clicks or interactions won out of the number of impressions. For example, if you have 10,000 impressions with 1,000 clicks, that works out to a 10%t click-through rate. A higher click-through rate means more eyes (and fingers) are interacting with your ad or ads.
Higher CTR Means Greater Relevance
A higher click-through rate also indicates that your ad and website are relevant to what users are searching for and clicking on. Higher click-through rates come from higher positions in search results. The higher the position, the more likely users are to click. Checking ad content and click-through rates therefore gives a better idea about what’s working and what isn’t.
Higher CTR Means Greater Profits Too
Cost-per-click (CPC) is another consideration. Ad relevance and the expected click-through rate factor into the quality score. The quality score is a tool that shows how your ads’ quality compares to that of other advertisers. As click-through rate rises so does the quality score, which leads to lower costs-per-click for you and your company. Even when CPC is only slightly reduced, lower premiums per click lead to greater profitability.
Higher CTR Means Better Quality Ads as Well
Are your ads any good? Observing CTR can help you answer that question. It lets you monitor ad quality and maintain volume control as well. For example, say there were 1 million searches for “baseball bat” each week. Your share of that market is determined by how many clicks you win–in other words, CTR.
Lower CTR Has Its Benefits Too!
Occasionally, CTR can be misleading. A low CTR doesn’t mean there’s an issue. Sometimes an ad variation has a lower CTR because of the users and searches it’s applied to, not because the ad is low quality. As long as this variation of the ad drives incremental clicks, a lower CTR is no problem. In the industry, this is known as an ad for the longtail!
So, to recap, what is click-through rate (CTR)? It’s the ratio of how often people who view an ad take the time to click it. It matters for three big reasons. It improves your quality score, lowers your CPC, and ultimately gets more people to visit your website leading to more conversions. Pay attention to what your CTR is trying to tell you!
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