Everything you should know about Click Through Rate (CTR)

What is the click-through rate? If you have heard of SEO (search engine optimization), you have probably heard the term “click-through rate.” But what is it and how is it used? Here are some basic definitions and some examples to better understand it.

Understanding what Click-through rate is actually

Click-through rate is simply the percentage of all visitors to a site that click on an advertisement. It’s commonly used to assess the success of a certain web advertising campaign and the effectiveness of particular email campaigns. For example, if a site receives a million clicks, that means that a huge portion of the visitors to the site were directed to go buy something. Therefore, the advertiser would want to maximize their potential profit by sending only the most targeted traffic to their website. And this is where the term click-through rate comes from. It gauges the rate at which these visitors visit a site.

So what is the click-through rate then? This question can be quite difficult to answer in general because it really depends on so many different factors. Generally speaking though, it measures how many visitors are brought to a site and then how many of those visitors actually purchase what they were searching for. The latter is obviously easier to determine because there’s no need for the traffic to actually purchase anything. Still, this doesn’t really answer the main question – how does a visitor get to your site?

Visitors come to a site either because they are seeking information or they have arrived at the site via search engines. Most search engines count this as being a visit and therefore count the visitor’s click-through as advertising revenue. But not all searches result in sales. If a visitor is looking for information on a topic, the search engines may not even bring up the site unless the visitor specifically states they are looking for that type of information. In this case, it’s not the visitor’s fault if the site does not bring up the specific topic they were seeking.

How Click-Through Rate is Calculated

Now, I hope it is clear to you how to calculate the Click-Through Rate (CTR). The below illustration depicts the formula to calculate the Click-Through Rate

How Click Through Rate is Calculated
How Click-Through Rate is Calculated

In a more simplified manner, if your click-through rate is 4, which means out of 100 impressions (your ad shown to people), 4 people have clicked your ad.

Case Studies and Exampls of Click-Through Rate

#1 Example: CTR from Google Adsense

Examples are easy to follow and understand. In the below example, I have captured typical data from my Google AdSense Account.

Click Through Rate in Google AdSense
CTR from Google AdSense

In the above image, No.1 shows the number of visitors who viewed my pages or the number of pages viewed by people. Out of 5 page views, No.2 shows I have received 1 Ad Click. Now, based on the above formula to calculate the CTR, you can see that No.3 shows CTR as 20 percent. How has it been calculated? (1 / 5) x 100 makes it 20%.

What does this number mean here?

Since I have 20% CTR, If I receive 100 page views in this manner, I will receive 20 Clicks. With the Cost Per Click (CPC) being $0.20, If I can increase the page views to 100, I will make $4 per 1000 visitors. That is what the RPM (Rate Per Milli) is shown closed to $40 (The actual shown is $39.04). In the context of Google AdSense here, RPM means the earning for 1000 views.

#Example 2: CTR from Google Analytics

Let’s see another example from Google Analytics.

Click-Through Rate in Google Analytics
CTR from Google Analytics

In the above image, You can see that the publisher’s CTR is 4.04%. It is based on the (publisher clicks divided by publisher impressions) x 100

So, (142 / 353) x 100 = 4.04%

Now, I hope it is crystal clear to you that how the Click-through rate is calculated and how they are used in different contexts.

What is a good click-through rate?

There is nothing like a good click-through rate. In fact, it should be evaluated based on conversion as against click-through. It means how many people have subscribed to your service or purchased your product out of the number of people who have clicked your ad or link. It is meaningless or a waste of your money even if you achieve 100 percent CTR but very little or poor conversion.

What is Conversion Rate (CR)?

It is also important that you understand this simple formula to actually value your return on investment. Therefore, the conversion rate is simply the number of conversions divided by the number of visitors.

For instance, let’s say you have received 100 visitors through your pay-per-click campaign. Out of those 100 visitors, 21 people have subscribed to your service. Then it means your conversion rate is 21 percent. The formula to calculate the conversion rate is shown in the image below

Formula to Calculate the Conversion Rate - AIinspired.com
Formula to Calculate the Conversion Rate – AIinspired.com

Making Sense with Click-Through Rate (CTR) and Conversion Rate (CR)

I believe, conversion rate along with the click-through rate will give an excellent data intelligence for you to make a winning decision. As discussed, CTR alone is not as meaningful as combined with Conversion Rate.

So, let us assume your campaign’s CTR is 4 percent whereas your conversion rate is 5 percent. Now your target is to make 100 sales or 100 subscriptions.

How many visitors or impressions you need to have in order to achieve your target sales?

Download this excel sheet to calculate it

Click-Through Rate, Conversion Rate, Target Sales Calculator by AIINSPIRED.COM

Download the excel sheet and fill up the values for CLICK-THROUGH RATE (In Percentage), CONVERSION RATE (In Percentage), and Target Sales in Numbers to get the required Number of Clicks and Required Number of Views / Impressions

Why it is important to bring traffics to your website?

Still, the search engines bring up sites all the time that have zero traffic. They do this so that they can display lists of sites that have zero click-through traffic. At the top of such a list, you will find the website that most deserves to be ranked higher. The reason why they do this is so they can direct more traffic to their page since this represents a potential gold mine for them.

A site with low a rating has zero traffic and therefore represents a potential disaster for any business. Google and other search engines don’t give much value to a site that doesn’t receive a certain level of visitor traffic. If the site isn’t attracting enough visitors, they will soon move on to the next ranked site on their list without giving it a second look. The more visitors a site attracts, the better the chance that the site will end up in the first page of the search results.

A site that receives a high number of clicks through, however, represents a golden opportunity for any online entrepreneur or a business owner. By simply tweaking the design of their web pages, these businesses can dramatically increase their sales. This is done by increasing the number of keywords used in the domain name of the site, the number of links that lead from the site, and the page itself.

These things alone can drive up the site’s overall performance in terms of click-through rates. To get an idea of how much of an impact these things can have on a site’s ranking, try searching for common domain names that represent popular products on the Internet and look at the page rankings.

A site with a very low page ranking but receives a lot of traffic can only move up in rank if they change the design of the page, link to other popular sites, and add more keywords to the domain name. In essence, the more things a web page consists of that lead to generating traffic, the better.

In conclusion,

CTR is one of the important measures to evaluate your marketing strategy and refine them. I hope this article is extremely useful for anyone to understand CTR and CR.

Let us know how do you find this article and share it with others.

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