Click-Through Rate: The Science Behind PPC Ads

Introduction

CTR or click-through rate is the ratio of the number of people who click on an Ad (clicks) to the number of people who saw the ad (impressions) expressed as a percentage. As such, CTR is among the most important metrics that you should track for the success of your PPC Ads.

Why CTR Matters for PPC Campaigns

Google uses several different parameters to appraise a website’s content and the relevancy of the site’s content to Google users. CTR is one of the metrics that Google uses to make this evaluation based on the relevancy of specific keywords.

Generally, for PPC Ads campaigns that are run on Google, a higher CTR means that a PPC Ad is more engaging and generates greater interest because it resonates with the audience that receives it. Since Google’s goal (and other search engines for that matter) is to connect users and advertisers, it follows then that they will incentivize advertisers to place high quality and relevant Ads for specific keywords.

To incentivize the quality and relevancy of Ads that will satisfy receptive audiences, Google offers higher Quality Scores to Ads with a high Ad CTR.

Quality Score and AD Rank

Quality Score is an aggregate of  PPC Ad quality determined using past data and is used to estimate how an Ad will perform during an auction in Google’s keyword bidding system. On a scale of 1-10, Quality Score is awarded based on three key components:

• Expected CTR
• Ad relevance, and
• Landing page experience

Ad Rank is calculated based on Quality Score components, bid amount, and the likely impact of an Ad format. The Ad Rank determines:

• Whether an Ad will show up in the search results,
• Where the Ad will show up on the search results and
• How much the Ad will cost.

In essence, every time a Google user uses a particular keyword that an advertiser is willing to bid for, Google calculates the Ad Rank for the PPC Ad.

As such, if an advertiser bids higher than another PPC Ad competitor with a higher Quality Score for the same keyword group, the advertiser with the higher Quality Score could end up paying a lower CPC and still get a higher Ad Rank as shown below.

Better yet, a top PPC CTR additionally implies that the advertiser is driving the maximum amount of traffic to their website, which will, in turn, increase the opportunity to increase conversions and maximize ROI.

What PPC CTR should you Target?

Many factors impact PPC CTR. These factors include:

• A particular campaign
• The targeted keyword group
• Where you place your Ad, e.g. Paid Ads in the Search Network to tends to have higher CTR than ads on the Display Network since display Ads are often blocked with Ad blockers.
• Industry, and more

To determine your optimal PPC CTR, start off by using competitor averages in your industry and then improve your CTR through constant monitoring and improvements.

With that said, targeting a high PPC CTR is not everything. Essentially, a high CTR that doesn’t draw in conversions is not useful to a business’s bottom line.

For example, if an advertiser gets a high amount of clicks for their Ad, and therefore pays a lot for their Ads, but the Ad is not converting, then their ROI will below.

Some steps that can be taken to enhance PPC CTR, and therefore, get a better ROI to include:

• Better keyword management. Bid for the right keywords that are relevant to the content and in reaching a targeted audience. Also, long-tail keywords often have less competition and reach consumers that are closer to converting to what is on offer.
• Copywriting. Appeal to emotion with a unique value proposition, inspire engagement with CTAs (Call-To-Action) and use captivating headlines.
• Ad Extensions. They help the advertiser include additional information to make the Paid Ads more credible, informative, and relevant. E.g. links to a site, location, star ratings, endorsements, callouts, etc.

Conclusion

CTR is an indicator of PPC Ad effectiveness and factors into Ad Rank and Quality Score. That said, a high CTR is not sufficient if you want to get value for money in your PPC advertising. It is crucial to ensure that you have a high CTR on relevant keywords that will bring in highly qualified leads that will convert into customers.