WHAT IS CTR AND HOW IS IT CALCULATED?

Google Ads can increase brand awareness by 80%. Pay-per-click advertising, known as PPC, is considered one of the best marketing tools and is effective in almost every business niche, regardless of the target region.

CTR (Click-Through Rate) is one of the key metrics for monitoring the effectiveness of pay-per-click advertising. There is no universal benchmark for all industries. The ideal CTR depends on many factors, and improving it requires ongoing effort.

What Is It About?

• What is CTR, and how do you calculate it?
• Why is Click-Through Rate important?
• How to improve CTR?
• Conclusions

What Is CTR, and How Do You Calculate It?

The average CTR is 6.64% for search ads and 0.57% for display ads. This article will focus only on Google Ads.

CTR stands for Click-Through Rate. It is the percentage of clicks on a link in an ad compared to the number of times the ad was shown to users. CTR is expressed as a percentage and is used to measure the effectiveness of ads for websites or email campaigns.

The formula for CTR is as follows:

CTR = (Number of Clicks / Number of Impressions) × 100%

For example, if an ad was shown 5,000 times and received 200 clicks, the CTR would be 4%.

CTR can be called the efficiency rate of an ad, showing how effective it is. By looking at general average numbers, advertisers can see the overall effectiveness of their ad campaign.

Most clicks from search queries in different business areas go to the top three results on Google. This includes both search queries and display ads. Since ads always appear at the top of the page, most people won’t look beyond the first three snippets and will immediately click on the ad links.

So, no matter how hard your competitors try to grow their free organic traffic, paid ads will always stay in a winning position. However, they also come with more risks. Some paid ads are shown at the bottom of the page, and these positions are less profitable for advertisers. Again, to avoid falling to the bottom of the search results and paying for low-CTR impressions, it is essential to fix mistakes in your Google Adwords account on time.

For example, out of almost 23,500 pages offering Korean cosmetics, the first results for the relevant search query will display with the “Ad” label. Usually, users trust these links, as they seem more credible, and the search process for the desired product or service doesn’t take much time.

To understand if your ad’s CTR is good enough, it’s important to define the basic CTR for your specific industry and the goal of the ad campaign. For brand awareness ads, the click-through rate isn’t as crucial as it is for ads promoting sales or new product updates for online stores. Real estate ads are usually more effective than ads from restaurants. So, you need to analyze direct competitors.

It’s also important to keep an eye on the average metrics of experienced advertisers in your region. For example, in a small town, a food delivery ad might have a lower CTR than in a big city. However, the website’s conversion rate and return on ad spend (ROAS) might be better in a small town where there’s no competition, and users are less likely to just browse the offer and leave for another site.

Why Is Click-Through Rate Important?

If the conversion rate of the landing page is high, then a high click-through rate reduces the cost per impression and makes the campaign profitable. This is because the money spent on promotion is recouped, and the profit from sales allows for continued investment in new impressions and remarketing. Google understands that the better an ad performs, the more accurately it matches user queries, and it adjusts ad conditions to be more favorable for advertisers.

However, it’s essential to keep in mind that a high CTR with a very low conversion rate leads to a high cost per conversion (CPC). If the ad text doesn’t match the website content or the landing page isn’t working properly, there is a big risk of failing the ad campaign.

“Since CTR is a metric that shows how relevant ads are to a user’s search query, a higher click-through rate usually leads to a higher Quality Score. This, in turn, can reduce the cost per click, encouraging advertisers to keep improving the relevance of their ads.”—Click-through rate, Wikipedia

A high CTR alone does not guarantee good conversion rates or profitability for an ad campaign. However, it helps you see how effectively your ads attract potential customers. After that, you can compare the ad text, placement, and calls to action to identify what needs to be changed to optimize the CTR.

How to Improve CTR?

The CTR metric helps you understand your target audience by showing what works and what doesn’t in your ads. A low CTR may indicate the need to adjust some elements of the ad text or improve targeting for the right audience.

We recommend focusing not only on ad CTR and page conversion but also on Quality Score. Google uses this metric to assess how relevant your ad is to the user’s search query. In other words, the system checks whether the ad text matches the user’s search query. It considers bids, landing page quality, historical CTR, and more.

The higher the Quality Score, the lower the cost per click. As a result, your ad can get more clicks. In 2013, Google introduced a minimum Quality Score. If your landing page has a very low score (from 1 to 3), you won’t be able to run your ad.

For low-intent keywords, the average score is 7, while for high-intent commercial keywords, it ranges from 8 to 9. You can check which specific campaigns or ads have lower Quality Scores in your Google Analytics account. This leads to the first tip for improving CTR.

Include 1-2 Keywords in the Headline and Ad Text

It’s a good idea to use relevant keywords with low to medium frequency. Long-tail keywords can also help increase CTR because they usually make the ad more targeted. But don’t overuse them—extended queries can reduce the number of impressions.

Use Ad Groups

In Google Ads, a group includes two or more ads that share similar goals. For example, you can target the keyword “Philips iron” in one ad group and “Tefal iron” in another. You can create separate campaigns for different keyword groups, segmenting them based on the target audience’s interests.

Add Negative Keywords

Negative keywords are terms that are similar to those relevant to your audience but aren’t a good fit for your business. Users may type them and mistakenly click on your landing pages. CTR may increase, but conversions won’t.

Removing unnecessary keywords will exclude irrelevant users from your ad campaigns and boost ad click rates. For commercial pages, negative keywords include informational terms and those with brand names similar to yours.

Include Offers in Headlines

Limited-time offers can be effective in creating compelling ad headlines. This also includes calls to action for free or attractive offers, such as downloading a lead magnet or exploring a sale.

Asking Questions

Research on Social Influence shows that headlines in the form of questions get 150% more clicks than regular ones. This applies to both organic search results and paid ads. There is also a belief that headlines with numbers can increase CTR by 200% and conversions by nearly 25%. The question should directly match the search query of the target audience.

Analyzing and Improving Ad Campaigns

To create highly effective ads, regularly run A/B tests and split tests. The first method involves comparing two ads from the same group. This is now available in the Google Ads dashboard through the “Ad Rotation” feature, which shows two ads simultaneously for 90 days. Split testing is comparing different versions of an ad by changing specific elements, such as the headline, call to action, or keyword.

Turn off unprofitable ad groups and reallocate the budget to more effective ads.

“If you can cut the bottom third of your most expensive search ads and reallocate those funds to display and remarketing ads with average performance, it can be a great way to start scaling your efforts more effectively in Google Ads.”—“12 Ways to Improve Your Click-Through Rate in Google Ads”,Kristen McCormick

About half of the clicks on Google Ads links are accidental or fraudulent. The fraudulent ones come from search robots and bots. Unethical competitors may use these methods to drain your ad budget. The main warning sign is a sharp increase in paid traffic with critically low conversions. To avoid such situations, you can use special programs to combat click fraud.

Conclusions

CTR (Click-Through Rate) is a metric that shows how effective your ads are. To improve this metric, you should not only work on increasing the number of clicks but also monitor the conversion rate of the landing page and the return on investment. This way, you can determine whether a high CTR is actually beneficial.

Focus on the ideal customer profile or target audience segments and create ads that grab attention while aligning with the website content. Before creating and launching ads, familiarize yourself with Google Ads requirements for ads and landing pages. Make the necessary adjustments to prevent your ads or account from being blocked in the future.

Questions and Answers