What is CTR? What is the CTR formula? What is a good CTR and how can you improve it in order to boost traffic?
Click Through Rate or CTR is a ratio of the number of clicks driven against impressions served in a digital advertising campaign. In other words, it is the ratio of clicks to impressions. We show how to calculate it using the CTR formula in the next section.
CTR is the key metric to use to determine how successful your ad has been at driving a click in comparison to the number of impressions it took to deliver that click. A high CTR means your ad is very effective in influencing a large proportion of users served with an impression, to click. If your KPI (key performance indicator) is to drive people to a particular URL or landing page, then CTR is the ideal metric to judge effectiveness.
Please note, for branding campaigns when your KPI is not performance driven, CTR is a redundant metric. Marketers and advertisers should stop thinking in terms of CTR as the sole measure of success because in many campaigns it is irrelevant if a user clicks on an ad or not. Simply getting the ad or message in front of an eyeball is enough to increase awareness of the brand.
To calculate Click Through Rate (CTR), you will need the following metrics to be used with the CTR formula:
How long is a piece of string?! But seriously, click through rates must be judged in the context of which digital channel you are using, and which formats you are running. Inherently, channels such as PPC will have far higher CTRs as users are actively looking to click on a search result; how many users do you think are actively hunting to click on the next ad they see in their social network newsfeed!?
While CTR is a good indicator in how effective your ad has been at driving a response, judging a performance or traffic driving campaign purely on click through rate can be dangerous. For example, compare the following two vendors:
Digital display vendor X delivers a CTR of 0.10%, with a CPC of $0.80
Paid social vendor Y delivers a CTR of 1%, with a CPC of $2.50
If we had split the budget equally, we would see that we are in fact driving more clicks with digital display vendor X than paid social vendor Y, due to the lower CPC, despite having a far lower CTR. On the other hand, if digital display’s traffic is far more likely to bounce compared to paid social this may be a consideration if you are after a quality audience rather than pure traffic. This highlights the fact that everything you evaluate must be linked back to the main objective of the campaign.
When evaluating a traffic campaign's success, we recommend you take into account CTR, CPC, bounce rate, and session/dwell time. This will give you a more holistic view on how effective your ad has been at not just driving the most efficient traffic, but on the quality of traffic as well.
CTRs vary depending on what type of digital ad it is, as well as how strong the call to action is, but in general PPC ads (1-5%) will generate the highest CTR, followed by larger rich media display (1-3%), social ads (0.20-0.80%) and finally standard IAB display banners (0.05-0.10%).
There are a number of ways to improve the CTR of your campaign or ad. We will focus on some of the key actions you can make to increase the percentage of impressions that result in users clicking on your ad.
Ad copy or creative: this involves editing the copy (text) or changing the imagery or design of your ad so that it either appeals more to your audience, it is more eye catching or it is more pursuasive at encouraging a user to click. We recommend you A/B test multiple ad copy or design variations in order to work out which is the most effective. Including a clear call-to-action will go a long way.
Buying method or optimisation setup: this might be an obvious one, but in most DSPs or buying platforms these days, you can set up your campaign so that the DSP will automatically bid for inventory or users who will most likely click on your ad. In Facebook Business Manager, this involves setting your campaign objective to "Traffic". These campaigns will drive low CPCs and higher CTRs than it if were set to deliver against a low CPM or against another non-related metric.
Increase your bid: paying more may pay off in the long-run if you are able to find the efficiency sweet-spot of driving more clicks while only paying a little bit more per thousand impressions or per click, however you are buying your media.