What is CTR? How Important is It?

There has been some debate over whether or not click-through-rates are accurate as a measurement of campaign success.

Click-through rate or CTR is defined as “the number of users that click on a specific link out of the total users that view a page, email or advertisement. It is commonly used to measure the success of an online advertising campaign for a particular website as well as the effectiveness of email campaigns.” (Source: Wikipedia)

Its primary purpose is to measure the ratio of clicks to impressions of campaigns, whether of an online advertisement or email campaign. In general, advertisers posit that the higher the CTR, the more effective the marketing campaign. Online advertisers determine the click-through rate by dividing the number of times a click is made on the ad by the total impressions (number of times an ad was served), expressed as a percentage. Let’s say for example that a banner ad was served 100 times, but was only clicked once, then that means that the click-through rate is 1 percent.

The Argument – Why CTR Is Important

The truth is CTR can undoubtedly give advertisers a general understanding of how well their advertisements appeal to consumers. It provides advertisers a base of visitors which have the potential to convert and can help them measure success in relation to competitors between campaigns. Another thing that CTR can help with is evaluating the ad copy and its effectiveness, specifically the call to action. The acceptable click-through rates may vary depending on your industry; however, extraordinarily low or extremely high CTRs can be a strong determinant.

If you find that your CTR is exceptionally low, you will then have the opportunity and responsibility to improve your marketing campaign. Make sure that your message is clear and concise, and make your website/product/offering as appealing as possible. On the other hand, if your CTR is exceedingly high it can indicate a problem, such as click fraud, and you should take the necessary steps to determine if this is indeed the case or not.

The Argument – Why CTR Is Not Important

A Mobile Ad Measurement Study conducted by Nielsen commissioned by xAd showed that click-through rates are not nearly as important as many people think. The study showed that “CTR appears to be completely unrelated, or even negatively correlated with Secondary-Action Rate (SAR), which reflects the percentage of secondary, highly-engaged actions like calls, directions and store visits.” The study found that CTR, in and of itself, is a poor indicator of ad performance.

Many believe that click-through rates don’t matter since they don’t necessarily mean a conversion, and do not tell you the quality of your visitors.

CTRs have long been believed to have a beneficial effect on website rankings. However, an experiment conducted by Bartosz Góralewicz, in which he carefully constructed a series of clicks to a closely monitored website in an effort to determine how much of an impact CTRs had on search rankings as a direct causal evidence, revealed that despite popular belief, click-through rate is not a ranking factor.

Should You Stop Measuring CTRs?

This is not all to say that click-through rates are a useless metric; however, this only means that advertisers should not rely on a single metric to measure the success of their campaigns. Marketers should not only focus on getting more clicks and driving traffic. Instead, they should be more concerned with conversions and ROI. Consider your goal, whether it is brand lift, conversation, engagement, purchases or sign-ups and utilize the tools and data in your arsenal which will give you the results you want.