Click-Through Rate: What It Means for Effective PPC Ads

To ensure the effectiveness of an ad, marketers check different business metrics, including the click-through rate or CTR. CTR is a good indicator of how well a pay-per-click ad brings traffic to a brand’s landing pages.

Generally, a high click-through rate indicates success for your advertising campaign. Because of this, businesses need to learn when the numbers are holding them back and how to give them a boost.

Read on to learn how to measure CTR, why it’s important when doing Google PPC campaigns, and what determines a good CTR for PPC.  

What Is Click-Through Rate?

CTR indicates the percentage of users who viewed an ad (impressions) and clicked on it (clicks). Clicking on the link directs these users to the landing page or advertised website.

The CTR formula looks like this:

CTR = (clicks/impressions) x 100

This means that if 100 people saw a PPC ad and 5 people clicked on it, the ad’s CTR is 5 percent.

While CTR is often used to measure paid advertising campaigns, it’s an effective success indicator for almost every other marketing effort out there. This includes organic search results, social media posts, and call-to-action (CTA) buttons on landing pages.

Why Measure Click-Through Rate?  

Essentially, measuring CTR helps marketers analyze their ad’s performance. If CTR is low, there may be a problem with the advertisement. Whether it’s the way the copy was written or the placement of the ad image’s design elements, a low CTR tells advertisers the ad isn’t compelling enough and may need some tweaks.

As with any other metric, the CTR does not indicate what the exact problem is. While it’s more of an indicator than a definite answer, it will direct them to a possible solution that can help boost the campaign’s success.

Achieving a High-Quality Score with CTR

CTR is also important as it affects a Google Ad’s Quality Score, which is vital for marketers trying to master PPC. Quality Score influences the cost and effectiveness of a brand’s paid search campaigns.

Search engines rank ads based on how effective they are. If an ad performs well, this means it is relevant to a particular set of audiences. If it’s relevant, it should stay on the top ranks of the search engine results pages.

Consequently, Google offers high-quality scores to ads with high CTRs. And high-quality scores allow advertisers to maintain—and even boost—ad position at a much lower cost.  

While many small businesses like a T-shirt business tend to do their advertising in-house, some don’t know how to create high-ranking ads. This is why a lot of companies seek the help of a professional agency to build and manage their Google advertising. This allows them to minimize the costly trial-and-error process of PPC, saving them on advertising costs in the long run.

What’s a Good Click-Through Rate?

Now, let’s address the elephant in the room: what’s a good click-through rate?

The answer—no matter how cliché it is—is it depends.

Often, the term “good CTR” is on a case-to-case basis. There are different factors to consider before deciding whether a CTR is good or not.

• The business’s industry. The average CTR varies for different industries, just as the search intent and behavior of their target audience. For example, the average CTR for Search ads falls at 2.41 percent for B2B products while it reaches a whopping 6.05 percent for dating services!
• The type of ad. Search ads have an average CTR of 3.17 percent, while Display ads average at around 0.46 percent. Naturally, search ads are clicked more often than display ads since they tap on the user’s search intent. Meanwhile, a banner ad may not be as relevant to the user, and therefore, is not likely to attract their attention.

For remarketing campaigns, brands may generate a higher CTR than with other marketing efforts. This can be due to the fact that users have developed existing brand awareness. This means they’re more likely to visit the website of a brand they’re already familiar with.

• Ad rank and position. As mentioned earlier, an ad’s ranking and position affect its CTR, too. For instance, an ad can gain a much higher CTR if it lands on the first page of the search results. But if it achieves a low CTR despite its top ranking, it likely needs some reworking to be more effective.

The Cons of High CTR

It’s natural to think that achieving high CTRs is good for business. However, this isn’t always the case.

A keyword that isn’t relevant to a business will not likely generate leads and sales. In this case, having a high CTR for such a keyword will do a business more harm than good. Irrelevant ads only cost them more money without bringing in the number of leads and sales expected.  

The reasons are simple. Businesses pay for every click, and getting a lot of clicks will result in higher ad spending.

In some cases, advertisers may not turn a profit even with the number of conversions they get on keywords that are priced too high.

How to Improve Your CTR for PPC Ads

Photo by olia danilevich from Pexels

You’ve learned that getting high CTRs isn’t always a good thing. Instead, brands should aim for high CTRs on ads that are relevant and affordable.

Relevant ads mean having keywords, images, and copy related to the landing page and offers. Furthermore, businesses have to ensure they bid on ads that cost enough to help them turn a profit.

Here are some sure-fire ways to improve CTR for PPC ads:

• Know your target audience. Proper audience targeting is vital in PPC campaigns. The most effective ads are those tailored to their audience’s specific needs and preferences. Otherwise, brands simply won’t get the clicks that they need.
• Check your ad titles and descriptions. Copy is crucial in getting potential customers to engage with an ad. Marketers need to review those ads with low CTRs and see if their descriptions need any tweaking. A pro-tip is not to over-sell and focus on the product or service’s benefit to the customer.
• Test your ads. By now, you already know that different ads appeal to different audiences. Brands will be able to identify what appeals to their target audience through A/B testing. This process helps them learn what content performs better and how to execute their campaigns in the future.

Start Advertising

The abovementioned tips should help businesses monitor their click-through rates and use this data to improve their future advertising campaigns. While CTR is an important metric to monitor when advertising, it doesn’t have to be a marketer’s only priority. They should also look at other business metrics to ensure their campaign’s effectiveness.