CTR stands for Click through Rate. It is measured as number of clicks received for your ad divided by the number of impressions served to that ad.
For example, if you bought a banner ad in a website and you have received 4 clicks out of 1000 impressions served. Then your CTR is as follows.
CTR = (Number of Clicks)/ (Number of Impressions served) x 100
= (4 clicks/1000 impressions) x 100
CTR = 0.4%
CTR is a very important metric used in online marketing for calculation of how successful an ad campaign is. A high CTR means, it is an indication that people are finding your ad more useful and therefore they are clicking on your ad more often which results in High CTR.
Generally people browse internet for informational or for entertainment purposes. Nobody will access internet for the purpose of viewing only internet ads and it is the same thing for people watching TV, as very few people watch television for the purpose of viewing only ads. While marketers are spending too much money on online advertisings, they obviously want to know whether their ads are brining any sales or leads or any user initiated actions. CTR is the one of the best metric which will be helpful for marketers to identify which ads were being productive and which were not.
If a person likes your ad, he will click on your ad and comes to your website through that ad. The more people click on your ad, the more people comes to your website. That means, the more clicks you get, and the higher the CTR will be. CTR will be very helpful when running a campaign on CPM basis. As in CPM you will be charged for number of impressions you get.
The higher the CTR will be, the lower you will be charged when buying traffic on CPM basis. As high CTR will lead to high amount of clicks, and therefore it reduces the cost per click.
Here is an example:
Consider you were advertising a banner named “banner1”
And here is the stats for that banner.
Impressions served: 90000
CTR: (clicks/impressions) x 100 = (958/90000) x 100
CTR: 1.06% (very high CTR)
Total Spent: 90x$2.50
Now, to calculate the cost per click,
Since you spent $225 in total for getting 958 clicks, now cost per one click is $225/958 which is equals to $0.234 per click which is very productive.
Let’s assume that, your CTR was very low, which means you received only few clicks.
Impressions served: 90000
CTR: (clicks/impressions) = (46/90000) x 100 = 0.05%
CTR: 0.05% (very low CTR)
Total Spent: $225
Now, calculating the cost per click,
$225/46 = $4.89 (Cost per click)
Which means, you have spent around $4.89 per click where in the above, you spent only $0.234 per click. The more clicks you get, the more sales will happen and it’s the same thing when you get less clicks, you will get few sales or no sales at all.
For high CTR, you get high amount of clicks and sales.
For low CTR, you get low amount of clicks and few sales or no sales at all.
That’s why CTR is very important factor in digital marketing.
Usually, most marketers consider 0.1 % CTR is the optimum number. If you are getting even lesser CTR than 0.1% means, you should stop running those banners and work on different banners to achieve at least 0.1% CTR.
Anything under 0.1 % CTR is considered to be not productive.
CTR in email marketing:
CTR is also considered in email marketing. The CTR calculated in email marketing is similar to that of CTR calculated in display advertising or search advertising.
Email CTR can be defined as the number of clicks generated to the number of the emails sent.
(Number of Clicks/ Number of emails sent) x 100 = Email CTR
If you sent around 1000 emails and you got 9 clicks, then your Email CTR is
[9 clicks / 1000 (emails sent)] x 100 = Email CTR
Email CTR is 0.9%
How to Increase your CTR?
According to my experience, if you advertise to the right audience, your CTR will drastically increases no matter how bad your banner is. Take for example, if you were advertising a Payday loans banner on a kid’s website, how do you think that you will get good CTR? It makes no sense right? If the same payday loan’s creative is being advertised on a payday loan website or a financial site, then you can see huge increase in your CTR. It’s all about targeting the right audience.
The highest CTR i got is around 14% where i have targeted to exact audience which yielded me awesome CTR. What is your highest?