Adwords Put CTR In Its Place

Day 20 of 100 Days of AdWords Help: Put CTR in its Place

When I have openings for new PPC Account Managers, one of the questions I ask during the interview is:

What is your response to a customer asking you to increase their CTR above all else?

Their answer tells me a lot about their understanding of Paid Advertising Metrics. What kinds of AdWords metrics are really important? How important is CTR?  If your CTR is low, what can you quickly do to increase it?

Let’s dig in.

What is CTR?

CTR stands for “click through rate.” It is the percentage of times your ads get clicked on per 100 impressions. If you have 1 click over 100 impressions, then you have a 1% CTR.

calculating ctr

CTR is calculated by placing Clicks over Impressions

Why is CTR Important?

CTR is one of the biggest influencers of Quality Score. In an AdWords account with Search Ads, the higher your Quality Score, the lower your cost per click.

If your CTR is lower than your competition, then you will likely have a low quality score, and find clicks very expensive. CTR is weighted by position, since simply being in a higher position usually garners a higher CTR.

The best situation that grants the biggest quality score boost is when you create an ad that earns a higher CTR than your competition who is in a higher position than you. This is the equivalent of hitting a half court shot.

What is a “Good” CTR on AdWords?

This question gets asked way too much.

what is a good ctr on adwords

Way too many people ask about a “good” CTR.

“Good” is relative. It’s relative to a lot of things.

  • Click Through Rate Relative to Your Competition. If you have a lower CTR than your competitors for the same keywords, this is going to be a quality score issue – with high CPC’s. In this case, it doesn’t matter if you have a CTR of 1%, 5%, or 25%. If it’s low compared to your competition, then you’re in trouble.
  • Click Through Rate Relative to Your Goals. What’s better, a CTR of 100% and a Return on Ad Spend of -300%, or a CTR of 2%, with a Return on Ad Spend of +300%. It’s a no-brainer. Optimize for Return on Ad Spend, and you’ll grow a profitable campaign. Optimize for CTR without focus on return, and you’ll have a costly, ineffective campaign. CTR is a tool to wield when you have already done the hard work to create a profitable campaign. Get more of that juicy, profitable traffic.

You Can’t Take CTR to the Bank

When you search “adwords improving ctr” there are over 50,000 search results.

searches for improving ctr

 

When you search “adwords improving roas”, there are just 23,000.

adwords improving roas

 

The search data above confirms a big fear: that people will optimize for CTR before they optimize for Return on Investment. . Don’t worry, you’re in luck. If you’re reading this, then you’re part of the online marketing revolution that focuses on metrics that influence your bottom line instead of vanity.

I’ve ranted about our CTR-Focused PPC culture before. Can you take your CTR to the bank?

No, you can’t. I often hear people bragging about incredible CTR’s, low CPC’s, or other wonderful non-commercial aspects of their ads. Welcome to the world of: Vanity Metrics. A vanity metric is something that may make your ads look good, but actually have only indirect relationship to actual commercial success.

You can’t go to the bank with a great CTR. I can write the juiciest, engaging, and seductive ad in the universe, achieving a Zeus-Like CTR of 100%, but if no one buys anything: It would be more Achilles’ Heel than Lightning Bolt. My time spent optimizing just for CTR would be a poor investment of my time.

In the world of PPC metrics, only one matters: How much money you made from your ads, and how much they cost. This can be represented by ROAS (Return on ad spend), which is (Revenue from ads – cost) / cost. Or cost over revenue (cost / revenue). Or revenue over cost (revenue / cost). In any discussion of any metric, make sure you are optimizing for ROAS, not CTR. Chasing CTR without attention to ROAS is a fool’s errand because CTR has only an indirect link to ROAS.

Here’s a real world example:

  • I had a customer selling a poetry curriculum to teachers, students, and parents of students.
  • They had great ad copy with terrific click through rates.
  • Their conversion rate and profitability were in the dumps
  • We discovered that this poetry course was attracting a lot of adult hobbyists looking to explore the world of poetry, instead of the K-12 audience.
  • By adding in ad copy that read “for teachers, by teachers” our CTR decreased, our savings went up, and the account was profitable for the first time.

How to Optimize for CTR (The Profitable Way)

A lot of AdWords Optimization is like a flow chart.

  1. Start by optimizing for relevance and profitability. Select the right positive keywords, add negative keywords, create great ad copy, and follow the other ‘Getting Started’ tips in our 100 Days of AdWords Help Series.
  2. Once you have established that your keywords are profitable and showing up for relevant queries, now it’s time to get even more of that relevant, profitable traffic.
  3. Test, Test, and Test some more. Keep a running log of ad copy themes you have explored. Follow some of the ideas we discussed in our ’20 Ad Copy Tips’ post.
  4. Make sure each ad group has at least two pieces of ad copy. If you have the time to optimize your account, set your ad copy rotation settings to “even”. This will let your ads earn statistically significant data. We use a lot of tools to determine if something is statistically significant, with the fastest being from KissMetrics

The real goal when you optimize for CTR.

The goal when you optimize for CTR should not be for the sole purpose of increasing your CTR. It is not a vanity metric. Approach improving CTR with the mindset:

  • I’m going to increase my profitability by increasing CTR to reduce my cost per click by increasing my quality score.
  • I’m going to increase my profitability by increasing CTR to get a larger amount of clicks that are already profitable.

When you approach your click through rate with the operating procedure above, your account will grow more and more profitable.

Michael Erickson

Emailing my clients and telling them I helped increase their return on ad spend by 300% never gets old. I love rising above the technical jargon and providing your business with online marketing momentum to reach new heights.
Enthusiast for all things science, surfing, and Search Scientists.