In Google Adwords, the Click-thru rate or CTR is a measure of how effective your ads are in attracting users. It allows you to determine the effectiveness of an Ad, keyword and/or the landing page. It directly affects the Quality score and determine the return on investment for your marketing budget.
The Click-thru Rate (CTR) of a keyword or an Ad in Google Adwords is dependent on a lot of factors. It is a reflection of your Ad, as to how effective it is getting the attention of the user among the competition. Often times, you would want to know what a good click-thru rate for an ad is so as to improve it or may be just know that your ads are performing “well enough“.
It is just not that simple. Obviously, the CTR could mathematically be anywhere between 0% to 100%. The standard answer I have heard is about 2%, which is not wrong. But the correct answer probably is: It depends. In addition to the quality of the Ad, it depends on your market niche, the target audience and your keyword mapping to a certain Ad. That is why we will concentrate on a good CTR rather than an average CTR.
Having said that, it is always good to know what you are gunning for. Of course, a 100% CTR is ideal and theoretically achievable but for sure it is hardly practical in real world scenarios. That means, you should have a reasonable and good base figure as goal in mind so that you can continue to fine tune and optimize the ads to achieve that.
First, you will have to segment the data into two, based on the network: Search and Display networks. This is important because the CTR varies wildly between the two of them and you have much more control over the search network than the display network.
The CTR on search network depends on many different factors such as Ad text, Max Bid, Quality Score, Ad Position in the search page etc. All of these can factor into an user’s decision to click on the ad link or not.
Let’s try take a very rudimentary mathematical approach to figure this out. We will make several assumption along the way to make things easier and also because we want to get an approximation for a good CTR and not the exact value.
Let’s assume that the keyword has a large enough advertising base, and that competition is high. We are trying to set a reasonable expectation for the CTR for the ads at the very outset. If the keyword you are targeting does not have high competition or competitors then you could easily be getting a top ad position and thus a good CTR.
There are usually 10 organic positions in the search engine result page (SERP) for a search. These free spots usually have a higher CTR because it is the main content of the page. It is the result of the query that the user searched for. There are 3 top positions and 8 along the right hand side where the ads or paid results are shown. These numbers do change from search to search and is dependent on the size of the ads shown and the available and eligible ads in the system.
That means there are probably about 20 links on a single page that the user can click on. Remember that the user can click on multiple links as well from the same page. For simplicity, we will assume that the user clicks on just one link…if all the links have equal probability then your ad link will have 1 in 20 chance of getting clicked, that is a CTR of 5%
1/20 * 100 = 5
But we know that the CTR varies according to the position on the page. The higher the position of link on the page the higher the CTR will be. So, if your ads show routinely at the top then you can expect a higher than 5% CTR and below that if it is mostly shown in the lower positions.
In my opinion, a 5% CTR can be thought of as “very good” for an Ad and keyword with a fair amount of competition. Remember that the organic search results have a much higher click rate than the Ads. That is because the users knows that there are advertisements on the page and also where these Ads are. Also they came to the page for the results and not the ads.
This means that our assumption earlier about equal probability for organic and paid links, is probably slightly skewed. You can probably expect a CTR of around 3.5 to 4 % which can then be considered good.
When it comes to the display network, there are a lot more variables that affect the CTR some of which is outside your control. This makes it very difficult to predict a good CTR for your ad.
The CTR depends very much on the CTR of the websites that the ad gets displayed on. The size of the Ad, the placement of the ad on the website, the audience or visitor profile of the site, the content all influence the CTR in the display network.
The CTR in display network is often much lower than that of the Search network. Probably this is where a 2% CTR might work best as an initial estimate. There are websites that have a high CTR of more than 5% and also ones that are below 0.5%, which makes your own CTR very volatile.
The Click-thru rate or CTR, in a mathematical sense is a linear scale statistic. The more clicks you gain, the higher the CTR. But the effort it takes to improve on your CTR is much more on an exponential scale. You will have to spend an overwhelming time and effort to push your CTR from 9% to 10% than it probably will take to push it from 2% to 3%.
I would suggest starting with a moderate expectation, something like 2% and then working upwards from there. You will need to let the ads run for a while to amass enough impressions and then segment the impressions by website to identify where your ads perform better and where.