If you've had any experience with Google AdWords, you have probably realized a couple things. First, building and managing AdWords campaigns is waaay more complicated than Google makes it sound (Ad Groups, Dimensions, Segments, Bid Adjustments, AAAAAHH!!), and two, you know the term Click Through Rate (CTR).
In the data ocean that is AdWords, most frenetic business people just need a couple of key performance indicators (preferably one) to act as a buoy and let them know their advertising dollars are working and being well spent. A campaign's Click Through Rate, for many, has become that metric.
What is a Click Through Rate (CTR)?
Every time one of your ads appears on a page somewhere on the internet, it is called an impression. When a user is interested enough in your ad to click it and go to your website or landing page, it is called a click, or click through. To calculate a click through rate, divide the total number of click throughs an ad receives by the total number of impressions, then multiply by 100 (to make it a percentage). That percentage is the rate at which people click on your ad, your click through rate. Here's an example:
Ad Impressions = 130,000
Ad Clicks = 2,275
CTR = (1,275/130,000) x 100 = 1.75%
Why is Click Through Rate important?
In short, your CTR is an indicator of your ad's relevance, and relevance matters BIG TIME to Google. Here's why: People go to Google (or their competitors) to find answers to their questions, relevant answers. If Google does not provide the most relevant answers, Bing or Yahoo is only too happy to step in to provide them.
When you advertise on Google AdWords, you too are offering answers to people's questions, through your ads. So your ads, and the offers behind them, must match as closely as possible to what people are searching for.
Hence, Click Through Rate. The higher the percentage of people who actually click on your ad versus the number of times it is seen (impressions) shows that your ad is matching what people are searching for. Again, CTR is an indicator of relevance.
Your ad's relevance should matter to you as well, for a couple of reasons. First, the obvious. The more clicks you get, the more traffic you earn to your site, which is the whole point anyway. The second reason is that Google rewards highly relevant ads, both strategically and financially.
Strategically, your ads will be served higher on the Google Search Engine Results Page (SERP), and higher average positions get more clicks than those lower on the page, leading to even higher Click Through Rates (Yay!). Financially, Google rewards high CTR's by lowering what is called your Cost Per Click. You actually pay less per click for more relevant ads, which means your marketing budget does more on less. Told you CTR matters.
So what is a good Click Through Rate?
Sadly, there is no cut-and-dried answer to that question. But take heart. There are some general guidelines. We at Kerigan Marketing are Google AdWords Certified and an official Google Partner (shameless plug!), and as such, we manage online marketing campaigns all the time. And one of the perks of being a Partner is that we have access to Google representatives that act as coaches and resources to help us get the most out of our clients' campaigns.
I asked my rep what Google considers a solid CTR target, and he told me 1%. I have spoken with a rep at Wordstream as well, a big pay-per-click software company, and he told me that, if he was pressed, he would tell the general advertiser that 2% is the average goal (though you can achieve much higher CTRs than that).
Now these are minimums,not party-throwing CTRs. But, if your Click Through Rates fall below 1%, you are looking at a very anemic campaign indeed.
But wait! There's more…
Click Through Rate is highly important, to be sure. But there is much, much more to achieving maximum success withGoogle Adwords. However, If you are looking for a decent thumbnail of how your campaigns are performing, or how your digital advertising agency is doing for you, CTR is a good place to start. Stay tuned to this blog, for there will be more AdWords insight to come…
Thanks for reading. And please, tell us what you think. What are your CTRs? Is there another metric you would use to judge basic campaign effectiveness? Leave your comments below!
Kerigan Marketing Associates is a web design and marketing services agency in Panama City, Fl. We are Google AdWords Certified and an official Google Partner. We have delivered sustainable success to hundreds of clients, and we would love to help you. If you would like to learn more about about what we do, or would like to start your next successful online advertising campaign, just click the button below. Thanks!