What is Click Through Rate (CTR)?
When you’re selling goods or services online, you will be trying to get people interested enough to come to your site or listing. The most common tool for this is pay per click (PPC) ads, such as those you see to the side of your Google search results. These are shown to people based on the keywords you associate with them, and what the customer is searching for. Obviously, you want as many people as possible to click on the ad, as that brings them one step closer to buying from you.
The click through rate is based on the number of people that see your entry, and then actually click on it to visit the product or page. It’s represented as a percentage based on the number of clicks divided by the number of times an ad is shown in a given period. So if the ad is shown 100 times (100 impressions) and the ad is clicked 5 times, then your Click Through Rate is 5%.
Why is Click Through Rate important?
Your Click Through Rate helps you to analyse how successful an ad is quickly and easily – obviously the higher is better and you can decide whether to adjust budget allocation, discontinue ads, or analyse why they are less successful to get the best value for money from your ad budget and assets.
In addition, Google Ads and other platforms tend to analyse the quality of your ads from the Click Through Rate (how well suited it is to the keywords you associate with it). They want to show higher quality ads to give a better experience to the customers, and make them more likely to click on the ads they show because the previous ads met their needs. Therefore better quality ads tend to get discounts on the cost to be shown – making your ad budget stretch further, and a winner for everyone!
What’s a good Click Through Rate?
Depending on what you’re selling, where and therefore who you’re targeting, this will vary – your ad provider will usually assess that for a given industry segment based on average rates. Obviously what they expect will also depend on your rank – if you win the first and top spot in a search they’ll expect a better Click Through Rate than the 4th or 5th. Therefore pay attention to your dashboards and information to get an idea of how well you’re doing compared to the average and whether you want to review, tweak, or withdraw the ads you’re using when you assess them periodically.
When is a high Click Through Rate not good?
As we said before, your Click Through Rate comes from your ads being shown and being assessed as relevant to the search. You’re paying to show them, and so you’re expecting a sale somewhere. This is why your choice of keywords is important. If you pick a keyword or keyword(s) and write a great ad for it that earns a good Click Through Rate, but it has nothing to do with the product, then a high Click Through Rate is bad. Because the people who click on the ad are highly unlikely to buy if they aren’t associated, which is an expensive mistake. So don’t forget that the Click Through Rate being higher is only good when you are targeting the right people with your ads.
When you’re using PPC and other paid targeted ads such as Google Shopping for your DropShipping business, getting the most value for money from your ad spend is essential. A decent Click Through Rate is essential, but look for quality over quantity. Getting the right clicks is much more important than a high click rate – quality clicks will mean much higher sales and better return on investment.