This week we’re featuring everything you need to know about click through rate. This metric is one that Google pushes you to use the most as their ad rotation default is set to optimize for clicks, which is the highest click through rate ad. This metric is useful to use for ad testing when you want to increase traffic or one of your primary goals is visitors. However, as it does not take into account conversions or revenue goals, it is often not a great for sites that are trying to gain new customers from PPC advertising.
What is CTR?
CTR is simply the ratio of impressions to clicks.
How CTR is Calculated
CTR is calculated by diving the number of clicks by your impressions:
CTR = clicks/impressions
It is generally displayed as a percentage. Here are some examples:
In this case, ad 1 has the highest CTR and ad 3 has the lowest CTR.
The Advantage of using CTR as Your Testing Metric
There are two main reasons to use CTR as your testing metric:
- Getting the most traffic possible
- Increasing quality scores
If your goal is to get more traffic, have more people see your site, then CTR is the best metric to use for testing. This is a common metric to use for brand departments who want to make sure that people are seeing their offer. It is also common to see companies use CTR for their branded keywords and another metric for their other keywords.
If you are struggling with Quality Score, then using CTR as an ad testing metric can often help in increasing Quality Score. As CTR is one of the most important factors in Quality Score, having high CTRs often correlates to higher Quality Scores (and often lower CPCs). It is common to see an account where there is a direct correlation between CTR and Quality Score.
For instance, here’s a chart for one account where the metrics are broken up by Quality Score ranges. The trend between higher Quality Scores with higher CTRs is a very common occurrence.
Therefore, if your main goals are to increase Quality Scores or receive the most traffic, CTR is a good metric to use.
The Disadvantage of using CTR as Your Testing Metric
While CTR is good for getting large amounts of traffic; what it doesn’t do is discriminate against good for bad traffic.
For instance, if you have a high CTR and a very high bounce rate; then you’re just attracting traffic that does not care about your message. Therefore, even when you are trying to get the most traffic possible, its best to use interaction goals (such as page views per visit or time on site) to make sure you are receiving quality traffic. Thus, CPI (conversion per impression) is a better metric to use than CTR when your goal is high quality traffic. With CPI, you can set a goal based upon a quality visit and then optimize your ads to attracting the most qualified visitors as opposed to just the most visitors.
Raising CTRs to increase quality scores is good for most companies; but not necessarily all of them. In many cases you use your ads to qualify users before they click on your ad. If you remove the qualification, then your CTR and quality score will often increase, but at the detriment of your overall goals.
For instance, in the B2B (business-to-business) space, it is common to add qualifications to ads, such as an account adding “for businesses” or large commercial sales adding “industrial” to the ads. The goal of those qualifications is to clarify to the user that your offer is specific to businesses and not to consumers. When you remove those qualification, you do often see some metrics (Quality Score & CTR) increase, but your sales staff is generally unhappy as they aren’t receiving as many leads or the ones they do receive are not qualified.
When testing ads, you often want to create minimum data requirements for some of your metrics before you even examine if a test has achieved statistical significance.
These metrics will vary by your testing metric.
When considering CTR; the minimum data metric you need to set is impressions. As long as the ads are being displayed, then you have a chance of a click and will be able to measure CTR.
Some people like to also set minimum click numbers; but the one issue with setting minimum click numbers is that if you have an ad that is doing terrible then it might take a long time to hit your minimum click threshold, which means you’ll waste valuable impressions on this ad that is not receiving clicks, and therefore is not being removed from your account.
Combining CTR with Other Metrics
There are many times that you’ll use two different metrics to determine a winning ad. What usually happens is one metric is a filter that is used to remove ads that cannot hit a certain threshold (such as CPA or ROAS) and the second one is used to determine a winner.
For instance, if your primary goal is to achieve $35 CPAs for a lead form and to also to have the most possible people view your offer then you will use both CPA and CTR in your ad testing. You would first examine the ads that had a $35 or lower CPA and remove the ones that do not meet that threshold. Of the ads that were left, you would choose the highest CTR as your winner.
CTR should never be combined with conversion rate to determine winners as there is a much cleaner metric to use in that instance, which is CPI (conversion per impression).
The same can be said of ROAS. In most cases, you would not combine ROAS and CTR as RPI (revenue per impression) is generally a better metric to use in those instances. There are a few exceptions in combining ROAS and CTR; but they are rare.
Where examining CTR is useful when combined with other metrics is to break ties. For instance, if you have two ads with identical metrics (such as CPI, CPA, CR, ROAS) and you’re not sure what to pick, choosing the higher CTR ad will generally result in higher quality scores and thus slightly higher positions (so more traffic) or lower costs.
If you care about the quality of your traffic, the CTR is never a good testing metric to use. In those cases, you should use a goal (such as time on site) and CPI (conversion per impression) as your testing metric.
If you care about actual conversions, then CTR is never a good metric to use by itself as it doesn’t use conversions or revenue in its calculations.
If you are struggling with raising quality scores, then CTR can be a great metric to use in your testing.
CTR is important. Without clicks, you won’t receive any conversions and the other metrics are moot. However, CTR is rarely a metric you will use by itself in your testing, yet is it a great stat to use as a tie breaker when you are also testing by another other metrics such as CPA.
If you would like to easily see your CTRs along with other testing metrics, take a look at what AdAlysis has to offer. You can easily see your CTRs along with many other metrics to make quick determinations as to what ad really is the best one to use for your account to ensure that you are hitting your advertising goals.