PPC Click-Through-Rate: What it Means and How to Use It (and Improve It)

Click-through rate (CTR) is one of the most important metrics you should be monitoring when implementing paid customer acquisition.

Defined simply, click-through rate is the percentage of impressions that result in clicks.

To calculate it, divide the number of people who click on your ad by the number of people who saw your ad and multiply that number by 100. A higher CTR typically means your ad generates more interests and is more engaging. It resonates with the audience who receives it.

This article will discuss why CTR is so important when managing PPC content, what CTR you should be aiming for, whether high CTRs are always good (and when they are not), and how to strengthen your PPC CTR.

Let’s start with why it is important to understand PPC CTR.

Why does click-through rate matter for PPC campaigns?

A high CTR is vital to the health of any advertising campaign, especially campaigns ran on Google, which is where we start this discussion.

Google uses a variety of metrics to evaluate your site content and relevancy to Google users.

One way it can tell whether your site is useful and relevant for certain keywords is through CTR.

A high CTR indicates to Google that you are helpful and attractive to people searching for that particular keyword or keyword phrase. In fact, Google tells us that “calculations of expected click-through rate” are used to calculate Ad Rank during auction time.

Intuitively, Google Adwords and other search based platforms offer perks to more relevant ads. This is because search engines serve as platforms connecting users with advertisers.

By displaying relevant ads, they keep the user base happy while also satisfying advertisers with a more receptive audience. Therefore, to incentivize relevancy and quality, they offer higher Quality Scores to ads with high Adwords CTR.

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Quality Score is awarded on a 1-10 scale and determined by expected CTR, ad relevance, and landing page experience. While Quality Score is not used directly during auction time, it is an aggregate representation of ad quality based on past data that can help you estimate how your ad will perform during the actual action. This makes increasing your Quality Score incredibly important because of Google’s keyword bidding system.

Each time someone performs a search using a keyword you have set a maximum willing to pay bid for, Google calculates an Ad Rank for your ad.

Ad Rank is calculated based on your bid amount, components making up your Quality Score, and the expected impact of ad formats. This Ad Rank subsequently determines where your ad shows up on the list of search results (and whether it is even eligible to show up) and how much money you end up paying for that ad.

This means even if your competition bids higher than you, you can win a higher rank at a lower pricing through having a higher Quality Score for the keyword group.

Additionally, a high PPC CTR also means you are bringing in the maximum possible traffic to your site and increases the chances of conversions when said traffic is relevant.

What is a Good PPC Click-Through-Rate?

Several factors affect PPC CTR and there is no real answer to whether your CTR is “good” or “optimal.” Your CTR is going to vary from campaign to campaign and even from keyword to keyword.

Rather, use industry averages as a starting point to placing your CTR amongst your competition and then aim to improve your CTR through strategic changes.

Search versus Display

There are two different networks your PPC ad can display on when you operate using AdWords: Google search network and Google display network.

The search network is Google’s text-based ad platform displayed on top of organic results on search engine results pages.

The display network typically displays image-based ads on other websites during user browsing sessions (e.g. banner ads).

Ads in the search network tend to have better CTR with the average at 1.91% than ads in the display network which have an average CTR of 0.35%.

This is because display ads are often blocked by adblock add-ons and displayed to uninterested users focused on other activities. Search ads are more likely to be clicked on since they are relevant to the keywords a searcher is looking for.

With search networks, the audience has intent.

To focus on display ads, you can use Rich Media Gallery’s benchmark tool to find out the average CTR for different types of display ads.

From this data, we can see that mid-page units (MPU) tend to perform better than leaderboards and sky ads. This may be because MPUs are placed inside user flow of sight while leaderboard and sky ads are out of the line of sight.

Using Rich Media Gallery, you can also find specific CTR information for display ads in your industry of interest.

To learn more about banner ads, I suggest reading “Banner Ads Suck (and How to Make Them Convert Better),” which further discusses positioning, design, typography, and color and size of successful display ads.

CTR by Industry

Looking at data from Wordstream, it is evident that CTR varies by industry.

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Here are a few highlights:

Dating and personal services have the highest CTR (3.40%) on the search network. This strength is likely attributed to engaging, emotional copy that appeals to searches seeking love.

Legal services show low CTR on the search network (1.35%). This is incredibly painful as “lawyer” and “attorney” also happen to be some of the most expensive keywords on search engines. In fact, law firms can spend $100,000 a month on PPC. The poor performance of these ads is likely attributed to heated competition as well as limited demographic targeting capabilities. More often than not, legal services ads will attract unqualified prospects.

Tech companies have the highest CTR (0.84%) while employment services have the lowest CTR (0.14%) on the display network.

However, these industry averages hide the effect of position on CTR.

How high up your ad appears on search results can affect the CTR of your campaign substantially. This is because most users will find what they need within one or two search results (especially given the typically higher quality of ranking results).

According to data from AccuraCast, CTR for search ads drop substantially after the first position. Whereas position one averages 7.11%, position nine only averages 0.55%.

Natural search results CTR show the same pattern with results in the first position accounting for over 50% of clicks across most industries.

CTR by Channel

With the rise of social media advertising, you might be interested in knowing expected CTRs on PPC ads on social media sites. Data from Fluid returns the following:

  • Facebook: 0.04% for display ads, 2.09% for newsfeed ads
  • Twitter: 1.00-3.00%
  • LinkedIn: 0.02-0.09%

Several variables might account for the differences in performance between the three platforms.

LinkedIn’s low CTR, for example, almost seems natural given the low activity of most users on the platform. Since it is used more as a resume displayer and recruiting site than a social feed, ads are less likely to capture attention. Moreover, it is difficult to target the right individuals with ads since most users are active on LinkedIn for only short amounts of time.

Your performance on social media channels may also be affected by your social media reach. A study done by SignUpTo, for example, shows an inverse correlation between followers and CTR.

  • Users with 50-1,000 followers had a 6.16% CTR
  • Users with 1,000-5,000 followers had a 1.45% CTR
  • Users with 5,000-10,000 followers had a 0.55% CTR
  • Users with 10,000+ followers had a 0.45% CTR

The topic area you’re posting about and the demographic you are targeting naturally also plays a role in determining your expected CTR.

For example, since only 10% of 65+ year olds use Twitter, advertising retirement services on Twitter will probably see a lower CTR than advertising clothing lines.

Facebook PPC CTR likewise differs by industry with legal and retail performance the best and employment & job training lagging in CTR.

Social media platform activity levels also change depending on day and hour. CTR on Twitter, for example, varies by day and hour. Most clicks occur on Saturday and Sunday between 5 and 6 p.m.

Are High Click-Through-Rates Always Good?

While high CTRs are generally seen as positive and good for bring in revenue and conversions, there are certain instances when high CTRs may be worse off for business value and profitability. By default, it is dangerous to blanket statement high CTRs as good.

Consider a situation where you are drawing a high number of clicks, but the clicks don’t result in conversions.

This means you have lost a substantial amount of money since you are paying for every click in a PPC campaign. This occurs often in mobile app display PPC campaigns when engaged, game-playing users click on your ad by accident and proceed to exit immediately. Some firms report CTRs over 50% on these types of campaigns and consequent losses.

If you have irrelevant mobile app placement you may want to exclude either individual or all mobile apps from your AdWords campaign. To do this, either select the “excluded” option next to individual placements or remove all mobile apps by adding a placement exclusion for “adsenseformobileapps.com.”

Message mismatch is a common cause for high click through rates, but low conversion rates. The advertising scent needs to remain the same from pre-click to post-click. In other words, the user should hit a landing page they expect, given the advertisement they say. Here’s an example of good message match, starting with the ad:

And the landing page:

A high CTR is also dangerous when you are paying too much per click.

For example, if you are paying $5.00 per click, but selling a product that is only worth $1.00, it only looks like you succeeded in making a sale and bringing in revenue. In actuality, you have a negative profit of $4.00. Therefore, it is important to calculate the return on investments (ROI) of all your ad campaigns.

To do this, you’ll want to consider not only the profit you receive from a conversion, but also the conversion rate of your PPC leads.

A high CTR means nothing if none of the clicks draw in conversions.

How Can You Strengthen Your PPC Click-Through-Rate?

There are many steps you can take to improve your PPC CTR.

We’ll focus on keyword management, ad extensions, copywriting.

Keyword Management

Relevancy is something we’ve mentioned many times in this article. A high CTR means you have relevant content that is engaging the right audience through targeted marketing. Becoming relevant means you must bid for the right keywords. A pizza place, for example, wouldn’t want to bid for the keyword “steakhouse.”

We also mentioned earlier that high CTR can be damaging if you are attracting the wrong demographic (signified by high bounce rates and low conversion rates). This means it is important to focus on specific and accurate long-tail keywords to attract qualified visitors and increase relevancy.

Long-tail keywords are longer, more specific keyword phrases that prospectors use when they’re close to a point-of-purchase. The idea is simple: bid for more specific keyword phrases to avoid competition and find consumers who are closer to buying exactly what you’re offering.

The graph above shows you a visual representation of the long-tail phenomenon.

While there are few keywords (food, Beyoncé, Facebook) that account for an un-proportionate amount of searches, the large majority of keyword searches are made up of more specific, long-tail searches.

About 70% of consumers are searching up less bid on keywords – which is where businesses need to focus their efforts.

Bidding for long-tail keywords is slightly counter-intuitive and is not right for every situation. This is because by bidding for phrases such as “semi-hollow steel-string acoustic guitar” instead of just “guitar,” you’re going to be bringing in less traffic.

However, the traffic you do bring in is going to be more qualified and often more interested in buying what you’re offering. At the same time, less of your competitors are going to be picking up the exact, specific keyword phrases that describe your product resulting in lower cost per click and higher Ad Rank. In the long run, acting on long-tail keywords results in higher Quality Score, CTR, and conversion rate.

In working with keywords, you’ll also want to develop keyword management strategies. To do this, you should group keywords semantically into keyword group themes so you can:

  • Organize keyword groups into ad campaigns for each campaign management and ROI calculations
  • Write targeted, specific copy for related keywords
  • Compartmentalize an extended list of relevant keywords

Some keyword management tools you may want to check out are Advanced Web Ranking, Long Tail Pro, SEM Rush, and WordStream.

Ad Extensions

Ad Extensions are additional elements on PPC ads such as star ratings, additional links to sites, endorsements, or “Book Online Today” callouts. They are Google’s way of helping you expand your ad to include additional information and there are both manual and automatic Ad Extensions.

To set up ones specific to your ad, click on the Ad Extensions tab on your AdWords account. There you can set up which type of Ad Extension you’d like to set up and run them at either the Campaign or Ad Group level.

Sitelink extensions allow you to promote additional site links on your ad and are great for broad match searches. They allow you to link to more specific parts of your site and add expanded ad text on an otherwise general ad.

Seller rating extensions automatically appear if your store is rated 4 stars or higher in Google Product Search. This seal of trust increases customer engagement by enhancing your credibility. Moreover, you are not charged for advertising when searchers click on your rating to read reviews.

Location extensions allow you to provide more information about your physical storefront and even adds a link that creates Google Map directions to your store. To set it up, you can manually enter your location or set up a Google Places page.

Call extensions allow you to display your phone number with your ad and shows as a call button on mobile devices. Do note, however, that you will pay for calls instead of clicks if customers use this feature. This might prove useful if you are a business where sales are made over the phone.

These and other Ad Extensions increase CTR by providing users with more information and enhancing your credibility. Equally as importantly, they are now a part of your Quality Score calculation. This means you may be losing clicks to your competitors and falling in Ad Rank if you aren’t using appropriate Ad Extensions.

However, not all of them appropriate depending on your business. Thus, be sure to run tests before committing to any extension.

For more information on Ad Extensions specifics, check out this Salesforce article.

Copywriting

Since you only have a limited amount of space to write ad copy, you need to make it count. Most PPC ads are easy to ignore since they fall into the same pattern of offering dry copy with low energy call to actions.

Let’s look at three examples of search network ads for the keyword phrase “floral delivery.”

While both Teleflora and 1-800-Flowers advertise high quality flowers, only Shop Gorgeous Flowers appeals to the problem the buyer is likely trying to solve – “make someone’s day perfect.” Shop Gorgeous Flowers also mentions specific features of their flowers to make their store more appealing (flat pricing, no upsells, eco-friendly farms, not cut until order).

To make your copy more appealing, consider:

You probably won’t end up with the perfect ad copy the first time around. It is important to test different variations of your copy to see what works and doesn’t work. Best practices, after all, are not specific to your company or your situation. Therefore, experiment a little and keep track of ROI on each of your campaign variants.

If you want to learn more about how to manage your PPC campaigns, I recommend these ConversionXL articles as a starting point:

Conclusion

In the end, the big takeaway is to test your PPC campaigns carefully and track the ROI of your campaigns. While CTR is a metric you should optimize for as it is an indicator of ad effectiveness and factors into your Ad Rank and Quality Score, having a high CTR on its own is not enough.

What you need is a high CTR on relevant keywords that draw in qualified, converting customers.