Click Through Rates - What are the limitations?

Click through rates (CTR) is a term often heard, but not always understood.  A click through is when an individual clicks on a link, ad, or web component online, which directs the user to a specified area online (site, video, form, etc.).  In marketing terms, this is a basic call to action. 

Click Through Rate

A click through rate is the  “number of click-throughs for a specific link divided by the number of times that link was viewed” (P.I. Reed School of Journalism, 2013).   The click through rate can be used as a measurement of return on investment for pay-per-click advertising.  This sounds simple, but in reality many factors must be considered to properly term an “effective” click through rate. 

Channel Differentials

CTR’s vary based on the channel in which they are displayed.  Search channels provide a higher  CTR than with display ads and banners.  Searches are more aggressive; individuals are looking for information and will click on the best fit.  When individuals see display ads, they may be interested, but if it does not fit the immediate need they may be more passive and not click as quickly.  These ads are often displayed to the user when they are doing something else and not actively searching for the information in the ad (Raehsler, 2012). 

Factors Impacting CTR

According to Lisa Raehsler (2012), a definite answer in regards to a good click through rate can be difficult to provide because of varying factors:

•   Audiences and targeting

•   B2B or B2C

•   Brand or non-branded

•   A keyword's place in the search funnel

•   Ad copy's creative messaging - CTA

•   Type of offer

•   Display URL

•   Images/design

•   Industry competitiveness

These factors can make it difficult to determine the proper click through rate for a specific website, business, or organization.

According to Raehsler (2012), non-branded ads may see a 1 to 7 percent click through rate in comparison to branded ads which can see a 3 percent and up CTR during searches.  Display ads are normally around .05 percent, with advertisers revamping ads when they fall below .03 percent. 

Click through rates are important for businesses with small budgets.  Small, local businesses need to understand click through rates in order to properly adjust and measure online campaigns.   Ad design, ad placement, and impressions can all prove very important for a small business conducting an online campaign.  These ads may be branded, but if individuals are unfamiliar with the brand, CTR may be lower.  It is also important to go local.  Placing ads locally in an area where consumers are more familiar with the brand will provide a higher CTR and a higher ROI.  That being said, when introducing a new business online search engine paid ads should be used because of higher CTR than display ads. 

Understanding how to calculate the CTR, the proper ratio to expect, and which online methods will produce the best outcome for a business is critical in maintaining a positive online marketing strategy that relies on CTR.   It is also important to remember to use other web metrics along with CTR to understand the full effect of the campaign.  Using CTR alone is not the best method, CTR is a basic call to action measurement, but without a definite follow through measurement, this rate can be misleading.  Therefore web metrics that measure beyond the basic call to action can be used along with CTR to provide the most insight and guarantee the most bang for the advertising buck.