Understanding Click-Through Rate: A Beginner’s Guide

Understanding metrics on Google Ads can be overwhelming, especially when you are learning technical skills. Starting with the basics and getting an in-depth understanding is vital when it comes to analysing data.

Click-through rate (CTR) can help improve the efficiency of your Google Ads account. It is a crucial metric when analysing the effectiveness of your ads. Understanding what works well for your target audience and what doesn’t can ensure your budget goes further.

What Is Click-Through Rate?

So, what actually is click-through rate?

Click-through rate is a percentage calculated by the total number of clicks divided by the total number of impressions, multiplied by 100. For example, if your ad is displayed 10,000 times and receives 500 clicks, the CTR would be 5%. 

CTR can be used to evaluate the effectiveness of all aspects of your Pay-per-click (PPC) campaigns, including:

• PPC search results (such as Google Ads, formerly known as Google Adwords or other search engines)
• Call to Actions (CTAs) on landing pages
• Email campaigns

Why Does CTR Matter?

Click-through rate helps you understand your customers by telling you what works and what doesn’t work when trying to reach your target audience. 

A low CTR could indicate that your language is ineffective or that you are not connecting with the correct audience. The definition of a good CTR varies by industry.

Given the competitive nature of PPC, it is advised to compare your CTR to the industry standard to see if it is effective or not. While 2% may be the benchmark for some industries, 5% may be the norm for others. 

Using historical data on the account can also give you an indication of a benchmark for where the CTR usually sits. This historical data can be used to track, evaluate, and improve the effectiveness of your campaigns.

Keeping a close eye on your CTR monthly can help you learn more about performance variations and whether there are increases or declines. While click-through rates can vary by industry, it’s good to understand the benchmark for each channel.

What Is a ‘Good’ CTR?

Your Business Data

The most reliable benchmark for CTR you have is your own historical data. This provides context of what’s worked for your business, your audience, and your products or services.

Start by looking into your analytics platform and looking at metrics that help provide context about your customers’ journey. We’d recommend taking a look at:

• Click-through rates (CTR)
• Conversion rates
• Cost per acquisition (CPA)
• Return on ad spend (ROAS)

If you’re not sure where to begin or have limited data, focus on your top-performing campaigns over the last 6 to 12 months. Comparing these to your current campaigns will then allow you to identify gaps or trends.

If you’re new to paid ads and don’t have enough historical data, you can begin by benchmarking against industry or channel averages. When looking into industry averages, these may vary, so be sure to take them with a pinch of salt.

They will however, offer a valuable average baseline until you build up your own insights…

Your Industry Average

Different industries will naturally perform differently due to competition, cost and scale of the business. A luxury B2B software product might have a longer sales cycle and lower conversion rate than a fast-moving consumer product.

This doesn’t mean one is underperforming; it just means expectations are different. We’d recommend factoring this in when reviewing your campaigns.

There are a number of factors that influence industry averages, such as:

• Competition: High competition usually drives up ad costs and can impact engagement metrics.
• Purchase Value: Expensive or complex products often take longer to convert, and services will usually take longer than buying a product. 
• Sales Cycles: B2B industries tend to have lower conversion rates but higher average order values.
• Seasonality: Seasonality plays a big factor in industry averages, as each season will perform differently.

Channel Average

When reviewing the industry average, it’s important to remember that each platform may be slightly different. Meta tends to have the lowest CTR due to the way the attribution works, as it’s slightly different to Google and Microsoft ads. 

Here are the average ranges for each channel:

Channel	CTR Average
Meta	0.9% – 1.5%
Google Ads	2% – 5%
Microsoft Ads	2.83%

Tips on How To Achieve a Strong CTR

1) Optimise Headlines and Descriptions

Ad copy can quickly become tired, but it is one of the most crucial assets when it comes to engaging with your audience. To appeal to your audience’s emotions and needs, you have to offer a solution; aim to use this to steer your thought process.

Review the keywords in your ad groups and utilise them as a starting point; it’s always a good idea to incorporate them in the copy to ensure the highest quality score possible. 

2) Include CTAs

Choosing the correct call to action for your ads is key, as it should be relevant to your product or service. Your CTA should be inviting and urge the user towards a conversion.

If you’re unsure which CTA to use, try out a few and see which has the highest CTR. This may help you determine what language your audience is most interested in.

3) Use Image Extensions

Visual assets are a great way to set yourself apart from other ads on the SERPs. We’d recommend running A/B tests on various images to understand what your audience connects with and what works best for your business.

4) Use Assets

Using assets on your campaigns is a key component in ensuring you get the most out of them. Points of action are a great way to connect with your audience; these can include pricing extensions, sitelinks, and business logos.

Adding assets will also help you differentiate from the competitors.

Understanding your target audience is essential when it comes to CTR; the more you know about them, the better you can customise your adverts.

Tailoring the ads to your audience’s tastes will help you get a high CTR because your service or product will be the answer to the customer’s problem. 

Is CTR All That Matters?

CTR is not the be-all end-all of PPC marketing. At the end of the day, getting your audience to click on your ad is just half the battle. In order to encourage a conversion, whatever that may be for your business (a purchase, call or form completion, for example), your customers’ journey must be cohesive and easy to navigate. 

This means every aspect of your campaign must be optimised – from landing pages to your budget.

If you want to learn more about landing pages, please read our blog ‘The dos and don’ts of PPC landing pages.’ Or, to understand more ways to help your budget go further, check out our blog,  ‘Tips to help your PPC budget go further’.