CTR (Click-Through Rate)
Click-through rate, impressions and clicks are likely the most used terms in digital advertising. They all carry importance but when measuring digital campaigns, it can easily be confused on which metric should be the focus.
While any advertiser can get impressions, they mean little if the target audience is not clicking on the ads. Getting the right impressions is also essential for a good CTR. For example, if you are a local casino in Iowa and you are getting impressions out of Florida, chances are they might not be your target audience. What also makes CTR one of the most important measurements in digital advertising is not all businesses have a monetary conversion on their website like an eCommerce company.
A CTR is a standard metric that is calculated by dividing the number of impressions by the number of clicks. For example, if your ad had 1,000 impressions and 20 clicks, you have a .02% CTR. Now you ask, “I’m getting a bunch of clicks from my ads so why should I care what my CTR is?” Well, each industry carries an average CTR for different forms of digital advertising. The average CTR for airlines will be very different than the average CTR for an auto dealer. The other thing a CTR affects is your cost-per-click (CPC). The CPC also has industry-specific averages. Are you paying $9 per click when you should be paying $1?
So where do you go to find out your industry’s CTR? Start with a Google search; there are a lot of credible sources online. Or, if you are lucky enough to work for a company that subscribes to a service like eMarketer, you have direct access to what the benchmarks are.
However, you may work in an industry that is not mainstream enough to have benchmarks, i.e. casinos. This is where agencies like Catalyst can help. By working with casinos across the country we know what those benchmarks should be. As an example, your SEM CPC should be under $2 and have an average CTR of 2%. Most of our casino clients have a CPC under $1 and even as low as $.35! And their CTR averages are above 7%! Not too shabby.
In short, you need to know what metrics to keep your eye on and how you stack up in your industry. Yes, everyone can get impressions (insert Oprah’s voice here), but are you getting the correct number of clicks? We say this with all sincerity, watch your media spend otherwise you may be paying more than you should.