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Click Through Rate (CTR) Essentials

What is Click Through Rate (CTR)?

Click-through-rate (CTR), by definition, is the rate at which web searchers click on a displayed online advertisement. CTR is one of the key measures of the effectiveness of an online advertising campaign. To calculate click through rate you divide the number of clicks – users who clicked on an ad, by the number of impressions – that’s the number of times the ad was displayed.

If you are running a Google AdWords campaign, you won’t have to calculate your click through rate as it is already presented to you in your AdWords account report interface. We often get asked what a good click through rate is, but it’s hard to define as different industries will have different standards.

As a rule, 5% is a decent CTR but that’s a guide – a really good average CTR is one that is consistently increasing. To manage this, website owners should be constantly tweaking and testing ad copy to see what works best. Small changes done regularly can have a big impact on improving CTR.

Click through rates of pay-per-click ads in Google sponsored links will vary from industry to industry. The placement of the advertisement can impact on CTR, as can the quality and relevance of your ad copy.

To account for relevance of ad copy, Google has a dynamic keyword insertion tool (DKI) which allows advertisers to tailor their ad titles to suit the specific search inputted by the searcher. For example, if you are a music store advertising guitars and you get searches for ‘secondhand Gibson guitars’ your ad will adapt to display ‘secondhand Gibson guitars’ in the title – effectively making it more appealing to the searcher and most likely, improving your click-thru rate.

There are other factors that will influence the click-through rate such as keyword match type – whether broad, phrase or exact, but again testing is the best means of improving this.

Banner adverts and social media advertisements tend to have considerably lower click through rates (less than half of one per cent in many circumstances) than standard sponsored links advertisements on Google and other search engines. When you factor in that Google accounts for 90-95% of all web searches conducted in Australia, it makes sense to advertise on Google – either through paid advertising or search engine optimisation (SEO) or ideally a suitable mix of both.

What Can I Do To Increase My Average Click Through Rate (CTR)

Firstly, it would be wrong to accept any CTR as satisfactory. There is always room for improvement. For instance if brand awareness for your product or service improves over time, refocusing your ad copy to be more brand focused is likely to increase your CTR – provided that brand is associated with meeting the needs of the searcher.

Important things to bear in mind are timing, locality, brand maturity and what stage of the buying cycle your potential customer when aiming to increase your average CTR.

Timing – Knowing when your target market search Google is vital. Peak periods will usually have higher costs per click but the likelihood of increasing CTR is higher in peak periods. It’s wise to have ad copy that converts before investing heavily in peak periods.

Locality – including locations in your ad copy can improve click through rate as regional and international customers might have a certain loyalty to their local businesses.

Brand Maturity – understanding the life cycle of your product or brand can be important for CTR. What is it about your product that makes it appealing to customers?

Buying Cycle – to appeal to customers, understanding how they behave at various stages of the buying cycle and tailoring ad copy accordingly can be important in enticing them to spend.

Clustering the focus of your keywords and driving the clustered traffic to specially tailored landing pages is also something worth bearing in mind – but that’s a conversion issue rather than a CTR one.

Overall, to increase your CTR – be specific and targeted in your approach. Consistent testing and evaluation of ad campaigns and click through rates will impact significantly on CTR. If testing results in a drop, then you can eliminate that course of action from your process.

If you are not satisfied with your average click through rate, consult the Google Adwords experts at roi.com.au. Call us on 1300 650 274 and let us improve help your ad campaign.