Click Through Rate

January 19, 2012 | Author: | Posted in Business/Advertising

Sometimes people find it a little confusing to understand how CTR works. This article will provide a detailed insight and help you interpret the facts in a better manner.

Definition: CTR is achieved when the people click on the ad after looking at it.

E.g. If the ad appears 100 times and the customer clicks 10 times on the ad, the CTR would be 10%.

Bottom Line: CTR measures how many internet visitors become clickers. It can be used to determine the influence of a web banner design. Nonetheless, many advertisers prefer a high CTR only if it results in more sales (from potential customers). This is because a banner ad is considered successful only if it generates business.

Assumption Associated With CTR:

It is impossible to determine if your competitor is clicking on your web banner ad to increase the advertising cost. Luckily the impact is negligible though many advertisers consider it as part of their business.

It would be a waste of time and money to purchase traffic that does not correspond to your message/will not result in new business propositions. Instead, you can increase the CTR by using appropriate text and the word “Free” in your banner ad.

The search engine will direct the customer to the web banner only if the ad text matches accurately with the keyword pattern. E.g. someone browsing for “car dealers” may be looking for brokers who sell cars or professionals selling spare parts.

You can convert internet visitors into subscribers, and prospective customers only if the website is performing well. The quality and volume of traffic will not have an impact on the CTR.

Significant Facts About CTR:

1. The statistical results for CTR vary from ad to ad, keyword to keyword, and over a period of time. It can be as low as 1% or as high as 20%. This is why advertisers don’t reveal their CTR data. Search engines provide approximate numbers, however this data may correspond to different advertising goals or underestimate potential performance.

2. Successful web banners always have the keyword in the headline. Advertisers may not get the desired result while using long keywords because they are sometimes placed in the body of the advertisement due to size constraint.

3. Higher CTR results in lower advertising cost and more “bidding power”. It is because search engines use the concept of Click Through Rate while ranking banner ads.

4. It would not be possible to compare the outcome of two ads using different keywords. This is because:

(a) The CTR difference between plural and singular versions can be 5% vs. 2.5%.

(b) The slightest variation in the keyword search can yield dramatic results.

(c) The outcome of the results depends on how often a person clicks on the ad and language used to perform the search.

(d) The topics and keywords behave differently when used by a group of users.

(e) Ads with different keywords are placed in different positions.

5. The best way to evaluate CTR is the long run is to compare ads with the same keyword and the historical data. If all the other factors remain consistent, the CTR should improve over a period of time.

Note: It takes a long time with minimal improvements to reach the optimal level. We would get to know this only when we are really close.

6. This means that search engine do not affect the branding process, and the banner ad language may not be popular with other forms of advertising.

7. Normally promotional languages do not have an impact on the customers searching for a particular solution. This is because they are searching for banner ads with specific context. The web banner language may go hand in hand with search engines but not with other forms of advertising.

8. CTR is a good tool to find out the response for the same keyword in different languages.

9. Search Engines will reward a higher CTR if the web banner ad is located higher on the page.

To conclude, CTR cannot be used as the primary metric to measure the effectiveness of advertising. This is because we need to compare the dollars spent versus dollars earned.

Note: Though high CTR may result in low CPC (Cost Per Click) it may eventually affect traffic volume leading to poor quality ads that will again increase the average CPC.

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