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What Is CTR (Click-Through Rate): All You Need To Know

It can be tough to tell just how effective your marketing campaigns are, especially when it comes to online ads. That's why it's important to understand metrics like CTR or click-through rate. Click-through rate can tell you a lot about whether one advertisement or another really drives traffic to your website or spurs purchases in your target audience members.

Today, let’s take a closer look at what CTR is and how it works in relation to digital marketing. We’ll also go over how to optimize the number of clicks you receive to your landing page or product page.

CTR Explained

Click-through rate is the percentage of people who both view and click on a particular advertisement. It’s distinct from impressions, which only measure the number of people who view an ad (or who are “impressed” by it).

Think of click-through rate as a metric breaking down the success of an advertisement. For any online advertisement, whether it's a banner ad, pop-up ad, or something else, the goal is to get people to click through the ad to visit a webpage, product page, or something else. So CTR tells you, in a percentage, just how successful a given advertisement is.

What Does CTR Tell You?

CTR tells you specifically the percentage of people who both view an ad and then click through it. It’s the number of times someone saw your search ad copy or call-to-action and decided to visit your e-commerce store. But it can also tell you a variety of deeper information about your marketing subjects or targets.

On a broad scale, a high CTR tells you that your advertisement (or a broader advertising campaign) is highly successful, high quality, persuasive, or emotionally resonating with an audience. On a specific level, CTR can tell you whether a specific advertisement is effective, interesting, or inspiring enough to get audience members to click on it.

However, it’s also important to note what CTR does not tell you. For instance, CTR doesn’t tell you the intent behind someone clicking on an advertisement or whether they will actually make a purchase. Still, CTR is a crucial metric for all marketers and business owners to understand, as it will allow you to further refine and iterate your marketing efforts for better success in the long run.

The Click-Through Rate Formula

Luckily, calculating CTR is fairly straightforward. The formula is:

  • CTR = (total measured clicks / total measured ad impressions) X 100

Let’s take a look at an example so you can see this formula in action.

Imagine that you have an online advertisement that is clicked on 200 times. However, the advertisement has been served 50,000 times (in this sense, served means that it has shown up on the screens of viewers 50,000 times — that’s not necessarily 50,000 viewers, of course.).

Now that you have this information, you can plug it into the formula and get:

  • (200 / 50,000) x 100 = 0.4%

The CTR for a given advertisement has a click-through rate of 0.4%. That's not especially high, but given that 50,000 people saw it, it's a good indication that it can snare prospective customers from your target audience overall.

The Importance of Click-Through Rate

Click-through rate is important for many different reasons.

For instance, if you have a high click-through rate for a given advertisement or marketing campaign, it's a strong indication that the ads and listings are helpful, relevant, and/or interesting. Getting a higher CTR is a sign that you should continue on your current marketing course. Make similar advertisements, or make sure that your future marketing campaigns touch on similar points as your current ones.

In contrast, a low CTR indicates that your customers aren't very interested in your ads. They might see them plenty of the time, but something about them doesn't result in many clicks. In essence, the click-through rate is important because it tells you how you should change or adapt your marketing materials as time goes on.

On a specific level, you can use CTR to determine which advertisements, keywords, and listings are most successful for you. You can then determine which ads or marketing materials are most cost-effective based on your business budget and target benchmarks.

Say that you have two different advertisements: one is expensive and has a high click-through rate relative to its number of impressions, but another is cheaper and has a low click-through rate. Once you look at your budget, you might find that the more expensive ad is worth more overall because it results in more clicks to your website.

CTR is also used to determine the price of PPC or pay-per-click campaigns and CPC or cost-per-click campaigns. Google’s search engine algorithm even uses CTR to assign a quality score to your web pages. Keep this in mind when practicing SEO or when designing email marketing materials.

What Is a “Good” Click-Through Rate?

When calculating the click-through rate, you might want to know what constitutes a "good" CTR. This can vary from industry to industry.

For example, many attorney and legal services advertisements average click-through rates of around 3.85%. Therefore, a good click-through rate in that industry would be 5% to 6%. Meanwhile, in the arts and entertainment, average click-through rates hover around 10.67%. A good CTR would be anything higher than that, like 12%.

If you don't know what a good click-through rate for your industry is, run advertisements and eventually calculate the average CTR for each. Then, try to get a CTR higher than average with all future marketing materials.

Is CTR the Same Conversion Rate?

CTR and conversion rate sound similar in many ways. However, they are not exactly the same things when it comes to marketing metrics.

The conversion rate is the percentage of click-throughs that lead to sales. Think of conversion as the act of going from a site visitor or ad viewer into a paying customer. When a target audience member clicks on an ad, they have not been converted yet. Only when they make a sale, sign up for a newsletter, subscribe to your service, or do some other positive action do they become a customer/subscriber.

In this way, conversion rate is technically a subsidiary metric of CTR. In fact, your conversion rate will usually be lower than your CTR, no matter how you measure it (unless you measure conversion by ad clicks, which is meaningless).

You should use both of these metrics to determine the overall effectiveness of your ad campaigns and ensure that your marketing materials are as interesting and resonating as possible and reduce your bounce rate.

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Click-through rate can tell you key information about how effective and inspiring your advertising materials are, namely how many ad viewers click on the ad to visit your site or make a purchase. With CTR, you'll be better equipped to maximize the effectiveness of your marketing campaigns.

But what about other marketing channels like OOH or out-of-home advertising, such as billboard ads? In that case, AdQuick might be able to help. Our comprehensive platform is perfect for helping you find, manage, and maximize the effectiveness of billboard ads in your area — try it today.


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