What is Click-through rate?

Click-through rate (or click-thru rate) tells you how many people are clicking through to your site from a third-party. For example from a link, search engine, banner, advertising or email campaign.

Your click-through rate tells you the success of your campaigns. Use this knowledge to determine which strategy is the most effective and focus your energy there.

A ratio showing how often people who see your ad end up clicking it. CTR can be used to gauge how well your keywords and ads are performing.

• CTR is the number of clicks that your ad receives divided by the number of times your ad is shown expressed as a percentage (clicks ÷ impressions = CTR).
  
  For example, if you had 5 clicks and 1000 impressions, then your CTR would be 0.5%. Here's how it's calculated:
  
• Each of your ads and keywords has their own CTRs that you can see listed in your account.
• A high CTR is a good indication that users find your ads helpful and relevant. CTR also contributes to your keyword's expected CTR (a component of Quality Score), which can affect your costs and ad position. Note that a good CTR is relative to what you're advertising and on which networks.
• You can use CTR to gauge which ads and keywords are successful for you and which need to be improved. The more your keywords and ads relate to each other and to your business, the more likely a user is to click on your ad after searching on your keyword phrase.

What's A "Good" Click-Through Rate?

This is a hotly debated topic: what constitutes a good click-through rate?

From a purely statistical standpoint, it depends. Take a look at Yahoo's answer to the "what's a good click-through rate" question:

The honest answer to the question is, “It depends.” Click-through rates are naturally going to vary from campaign to campaign, and even from keyword to keyword. Everything involved in the way your ad is displayed plays a part, from your ad copy to the ad’s ranking on the results page.

So while you want to have a "high" click-through rate, there's really no magic number. Average click-through rate will vary by industry, and you’re expected CTR depends on your ad's position, among other factors. Generally speaking, as we mentioned above, you want as high a click-through rate as possible.

Except when you don't.

When Higher Click-Through Rates Are Actually Bad For Business

If a keyword isn't pertinent to your business or isn't going to generate sales, leads, branding gains, etc. then a high click-through rate for that term is actually bad for business. The reasoning for this is fairly clear:

• You're paying for every click.
• A lot of clicks generate a lot of ad spend.
• Sometimes you're generating clicks on keywords that are priced too high, and won't turn a profit even if they convert.
• Irrelevant terms and clicks are just spending money without bringing in additional business.

So you don't always want higher click-through rates: what you want are high CTRs on keywords that are:

• Relevant - Have to do with your ad text, your landing page, and your offering.
• Affordable - Keywords that aren't going to be profit-prohibitive.

So, in a nut shell, a good CTR means first targeting the right words, and then getting as many people as you can to click on those ads.

Achieving Strong Click-Through Rates for Your Ads

Achieving strong click-through rates in PPC, then, depends on:

• Targeted keywords to bid on.
• Cost-efficient clicks.
• Tools and methodology for closely integrating keywords with ad text and landing pages.
• The ability to quickly and efficiently segment keyword groups to generate closer targeting.

Remember, the higher your click-through rate, the better your Quality Scores will likely be, and high Quality Scores are one of the single best predictors of success in PPC.