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Click It! How to Calculate Click-Through Rate and How to Know if Yours Is Good

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If you market your business online, you probably use PPC advertising, and you’ve probably checked your click-through rate, you may have even worked to improve it, and you may have turned to your co-worker and had a conversation like this:

You: “Hey! Our click-through rate is up to 5 percent!”

Co-worker: “Great! …. Is that good?”

You: “Well, I don’t actually know.”

 

What Is Click-Through Rate?

Click-through rate, shortened to CTR, is the percentage of people clicking an ad versus the total number of people who see it. Number of clicks divided by number of impressions.

 

Calculating CTR

If you had 100 impressions on a given ad and 25 clicks, your CTR would be 25%. Roughly 25% of all people who see your ad are clicking through it. This may not sound like a lot, but 25% is actually an amazing click-through rate.

When you calculate your CTR, consider the context of the ad and segment data accordingly. What type of ad, for what keyword, for what landing page, in what placement in a group of ads? If you’re running a robust campaign targeting different keywords, an overall CTR for the campaign doesn’t tell you much of the story. Segmented data lets you see what’s really happening and take action.

 

CTR and Quality Score

Not only does a high CTR show that people like your ad, not only does it bring more customers to your landing pages, but it also directly affects your quality score

Quality scores are given out by the majority of online advertising platforms, particularly Google Ads and Facebook Ads.

The higher your quality score, the lower your ad costs will get. This is done because advertisers want to show ads that are relevant to the user’s search. 

Having a high quality score also ensures you keep your ad position. Advertisers don’t want to host unsuccessful campaigns. If you’re always getting low CTRs, the advertiser will charge you more.

 

What Is Considered a Good Click-Through Rate?

A good click-through rate is dependent on your business and where you are in the market. 

The average CTR is much lower than you might expect. Across all industries, the average click-through rate is just below 2%. 

Does that seem low? Think about it: How many ads do you see every day across the internet? Now, think about how many you actually click on. Chances are, you’re not clicking that many ads.

Even a CTR right under 2% will get you customers, assuming you’re targeting highly-searched keywords or using wide demographics in social media marketing.

Want a different answer?

A good click-through rate is one that’s better than it was yesterday. PPC advertising is all about testing and refining. Each industry, each product, each service, each keyword, and each landing page is different. If you’re using data to see how your specific ads are performing, you can improve them over time. That’s the name of the game.

 

A Formula That Matters: Click-Through Rate x Conversion Rate

The real test of your PPC campaign is how many people convert. To find that, you need to consider CTR and conversion rate. Once people click your ad and they land on your site, do they buy your product? 

Let’s say you get a 2% CTR and a 10% conversion rate.

2% x 10% = 0.2% 

That means that you need to target a keyword with 1,000 searches per month to make two sales a month from PPC ads on that keyword.

 

Another Formula That Matters: Profit Per Sale – (Cost Per Click ÷ CTR)

Let’s say you net $50 from every sale. You’re spending $3 per click, and you’re getting a 10% conversion rate.

$50 – ($3 ÷ 10%) = ($50 – $30) = $20

In this case, you’re making a $20 profit. You’re spending $30 to make a sale. You’re making $50 from that sale. Nice work!

 

Is a High CTR Always Good?

Despite what you might think, high CTR isn’t always a good thing.

A million people may click your ad, but if these people aren’t converted to customers, what’s the point? You pay for every click, so you want every click to convert the customer. If it doesn’t, you might as well be throwing your money away.

The takeaway: Aim for a high conversion rate. 

Test the waters first. Come up with an ad campaign, then set a budget for your PPC campaign. Pay for a set number of clicks, and see how many conversions you get during the test. After that, you can increase your budget or restrategize.

 

How Can I Increase My Click-Through Rate?

Know your market, know your product, and advertise towards it. Choose to target keywords that show a high buyer intent, which is usually reflected by the cost per click. And choose keywords that closely match your product or service. If you spend money paying for clicks, but don’t have exactly what the customer is looking for, you’ll end up with a low conversion rate.

Notice that minor language differences that can imply a much different intent. For example, let’s look at these two makeup-related keywords:

“Lip gloss” = a high-intent keyword; the user likely wants to buy lip gloss.

“Lip gloss tips” = a low-intent keyword; the user likely wants information about applying lip gloss.

Spread your advertising campaign wide and set up detailed tracking. Consider using as many different advertising platforms as you can manage. Keep track of which ones perform best, which ones have the highest ROI.

 

Get High Click-Through Rates Now

Click-through rate is vitally important to any business doing PPC advertising. The more clicks you get, the more customers you’re likely to get. 

If you’re looking for a reliable SEO company to up your click-through rate, get a free assessment from 1SEO. We’ll help you gather and implement all the keywords you need to up that CTR.

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