CTR is one of the most important metric for anyone involved in affiliate marketing. It stands for Click through Rate. It is measured as the number of clicks received for an ad divided by the number of impressions served for the same ad.
For example, if you bought a banner ad in a website and it ended up receiving 7 clicks out of 1000 impressions served. Then your CTR is as follows.
CTR = (Number of Clicks) / (Number of Impressions served) x 100
= (7/1000) x 100
i.e. CTR = 0.7%
CTR is a measurement of success of an online ad campaign. A higher CTR means more number of clicks for those many impressions, which means that that people are finding your ad relevant/useful/tempting enough for them to click it.
CTR is very helpful when running a CPM campaign. In a CPM campaign, you pay per 1000 impressions, so cost is fixed and hence, you can maximize gains by getting more clicks or improving your CTR. As high CTR will lead to high amount of clicks, and therefore it reduces the cost per click.
Here is an example to illustrate it further:
Consider you were advertising a banner named “banner1”
And here is the stats for that banner.
Impressions served: 80,000
CTR = 100 x (clicks/impressions) = 100 x (680/80000)
CTR = 0.85%
Total Spent = $3.50 x (80,000/1,000) = $3.5 x 80 = $280
Now, to calculate the cost per click,
Now you spent $280 to get 680 clicks, which means Cost per Click or CPC is $280/680 = $0.417
Usually, most marketers consider 0.1 % CTR is the bare minimum number. If you’re getting a CTR lesser than this, you should stop running the ad and try a different campaign or a different banner or angle. Anything under 0.1 % CTR is considered to be not productive. Wordstream has an interesting infographic on Google Adwords CTR
You can use CTR to evaluate performance of other campaigns too. For example, in case of email marketing CTR can be number of email opens divided by number of subscribers.
How to Increase CTR
According to my experience, targeting makes all the difference. If your ad can resonate with your targeted audience, you can increase your CTR. With better targeting, a lower quality of banner or lander also works. For example, if you’re serving ads for a gaming app for kids, your target audience is not kids but parents. Why? Because kids may get lured by the advertisement but it is their parents who can buy the app and not the kids.
Of course, CTR varies with verticals. What is the highest you’ve received and the vertical it was in? Let me in know in the comments below.