Click-Through Rate: Short Summary
Click-through rate, or CTR for short, is a major performance metric within the fields of online marketing and web design, which measures the percentage of users who click on a link that they have been exposed to. It involves calculating the ratio of users who click on a specific link, when compared to the number of users who view the web page, advertisement or email that the link is contained within. This can be simplified to the ratio of clicks to views or impressions.
As a key performance indicator, click-through rate is especially useful when assessing the effectiveness of online advertising campaigns, such as banner advertisements, or email marketing campaigns. As a general rule, the higher the click-through rate, the more effective a campaign has been at encouraging users to click. With that being said, it is also important to understand that a high click-through rate alone is not necessarily a guarantee of success.
Click-Through Rate: Detailed Summary
Click-through rate is a performance indicator, which is designed to track the percentage of users that are presented with a link who actually go on to click it. It is primarily associated with measuring the effectiveness of online advertisements in actually generating clicks, but it can also be useful for analysing the effectiveness of email marketing messages, web page designs, and some of the specific features on a web page, such as call to action buttons.
The click-through rate for a particular link is expressed as a percentage. So, for example, if 100 people were exposed to a link in a particular time period, and five of those people clicked on the link, the click-through rate would be five per cent. With this in mind, the basic formula for calculating the click-through rate for a link is as follows:
CTR = ( total clicks / total views or impressions ) x 100
It is a commonly held view that a high click-through rate is indicative of success, whether that means a successful advertising campaign, or a successful web page design. Focusing on online advertising, CTR can also be a measure of relevance to the audience, with a high click-through rate suggesting high relevancy and a low click-through rate suggesting low relevancy. Similarly, with a call to action, a high CTR suggests the call to action is working.
However, actually assessing what represents a high click-through rate can be difficult, because average ratios can vary quite considerably between banner ads, search engine ads, landing page calls to action and email marketing links. On top of this, click-through rates for traditional online advertisements have declined over time, as users have become more cynical towards advertising and more conditioned to ignore display ads on web pages.
For this reason, click-through rates are often best contextualised by comparing ratios to similar adverts, which are positioned in similar places, or by comparing the performance of different adverts placed on the same web page(s). Moreover, the CTR metric can be essential for A/B testing a call to action, or the wording on a search engine ad.
Some people confuse click-through rate and conversion rate, but the two KPIs measure different things. Click-through rate purely measures the ratio of clicks generated, whereas conversion rate measures the number of people who went on to ‘convert’, which could mean buying a product, registering for an account, or making a phone call. A click-through is sometimes seen as an indicator of interest, whereas a conversion occurs when a user has been fully convinced.
While click-through rates are extremely useful for marketers and web designers, they are also valuable for search engines like Google too, because they sell advertising space on a pay-per-click basis. In simple terms, this means that the more people that click on an advert, the more money the search engine makes. However, contrary to the beliefs of many marketers, research suggests that click-through rate is not a ranking factor for organic search results.
With that being said, click-through rate, as a metric, is relevant to the field of search engine optimisation, because it can help marketers to understand how well their website actually attracts clicks from search engine results pages. This can also help to inform decisions made regarding page titles and meta descriptions.
A performance metric that is very closely related to click-through rate is unique click-through rate, or UCTR. By default, click-through rate would measure the total number of clicks, including multiple clicks coming from the same user. By contrast, unique click-through rate ensures that each individual user is only measured once. Both metrics have value, but UCTR is sometimes preferred, because it can more accurately represent the range of user reactions.
The Limitations of CTR
The click-through rate metric can be valuable for marketers and web designers alike, indicating the extent to which a link is generating interest. This can help to inform decisions on the design and placement of advertisements, as well as the wording of a call to action, or the content placed around the link in question. It is also a relatively easy KPI to calculate and track, and can be broken down into true click-through rate and unique click-through rate.
Yet, there are limitations with the CTR metric too and it is important that marketers and web designers understand what it is not able to measure and what it can not tell you about user behaviours or responses.
Perhaps the single biggest limitation of click-through rate is its inability to tell marketers or web designers whether the clicks that were generated actually resulted in the intended user action. This means that an advertisement could, theoretically, be extremely effective at generating clicks, but completely ineffective at getting users to take the next step and convert by buying a product, registering for an account, or subscribing to a service. It is, therefore, perfectly possible to have a high CTR, yet still have an advertisement that is performing poorly.
On the other hand, there may be instances where an advert is seen by a huge number of people, such as when you bid on an extremely valuable but non-specific keyword. This exposure could lead to a large increase in the number of people visiting your website, suggesting the advert is performing well, but the actual ratio of clicks to views could be fairly low. In this case, you could have a low CTR, yet have an advert that has attracted huge numbers of additional visitors.
Another potential problem with the click-through rate KPI is that it is a measure of fairly immediate user response, and is limited to link clicking. For instance, it can measure the ratio of people who click on an advertisement for Amazon when they see it on a web page. However, it cannot measure the number of people who see the advert for Amazon, continue with what they were doing, and then opt to go to Amazon later on, as a result of seeing the advert.
Marketers and web designers spend a lot of time trying to understand user behaviour, as well as the effectiveness of their work. Click-through rate is one of the main metrics both groups use to actually assess performance. While there are limitations to CTR, it is a valuable way of assessing the interest generated by an advertising campaign, or the placement or wording of a call to action, and can be especially useful as a comparison tool.