When working with Google Adwords, one of the common questions that you hear is what is a good ctr for my campaign? Unfortunately, there is really no correct answer for this, as it depends very much on a lot of different factors and some of which are outside your direct control.
The Click-thru Rate or CTR depends on the product or service you are marketing. It depends on the geographic locations you are targeting, the demographic of the users you are targeting, the overall marketing budget you have, and the competition you have among others. That is the reason why the CTR that different customers/campaigns get are different even if they are marketing the same or similar products.
There are some factors that are still under your control, that you can use to improve your overall appeal and CTR. These include the keywords, the ad and ad text, and the landing page. In the context of this post, we will assume that the you have optimized for all the factors that are under your control.
It still good to have a Click-thru rate value in mind that you can target. This gives you the incentive to monitor and further optimize the campaign. So, the question remains what is a good ctr for this campaign?
The Moving Target
One good way to think of CTR is as a moving target. In this method, you try to improve your CTR by a percentage of you current CTR, regardless of what it is. You can choose some value that you feel comfortable with. I usually suggest 50% as it is good round value.
So, if your current CTR is 2% then your target will be 3% over a period of four weeks. It is important to also have a pre-determined time frame so that the value can be averaged out. This makes it less vulnerable to ups and downs in the traffic which is inevitable.
Once you have got to 3%, your next target is 4.5% and so forth. Also, it makes most sense when you can keep your CPC at the same level.
The Static Target
Another method is to set a static target which can remain constant over long periods of time, depending on a set of factors that you already know. These set of values will be something like the total marketing budget you have and the revenue you generate from each conversion. This is most useful when you have somebody else managing your adwords account, and you want to evaluate the effectiveness of the campaign.
Again, this now becomes very specific to your campaign. We probably still can generate a value that can be considered as good CTR for a generic campaign. There are some differences between what a “good” CTR is and what you should target. Also, CTR differ vastly between different search networks.
In the google search results page, there are 10 organic results and a varying number of paid links. The number of paid links usually varies anywhere between 3 and 10. The exact number will change depending on the search query as well as the google result page layout. Every time, google modifies the page layout the number of results could potentially change.
In this post and for this exercise, we will assume that the page has 5 paid links which is on the conservative side. We will also assume that each link on the page gets equal amount of clicks, which by the way is never the case. But our target here is to get at least as much as hits as the average of other links.
So, if there are 10 organic links and 5 paid links on the page, then you should get at least 6.6% of the total impressions. (ie =100/15). I usually round this up to 7%. If you are getting 7% CTR for your campaigns then it is pretty good as you are getting as much as what the average of organic results are getting.
In certain cases, I do increase it further depending on how much your CPC is. If you are spending a lot on each click (ie. you have a high CPC) then you need to get a high share of the hits to make it profitable. In such a case, you should be targeting something like 10%.
One of the factors that could affect your CTR is the CPC. The more you spend, the higher your slot on the page and it can potentially increase your CTR. In most cases, the increase in CTR makes sense only if you can keep the CPC constant. An increase is CTR is a direct effect of your optimization efforts when the CPC remains the same.
As a side note, sometimes you reach the CTR plateau and the only way to improve is to increase the CPC. Go ahead and increase the CPC in that case and start measuring and optimizing for the new CPC and budget.