Click-through rate

Click-through rate (CTR) is the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement. It is commonly used to measure the success of an online advertising campaign for a particular website as well as the effectiveness of email campaigns.[1]

Click-through rates for ad campaigns vary tremendously. The very first online display ad shown for AT&T on the website HotWired in 1994, had a 44% click-through rate.[2]

Purpose

The purpose of click-through rates is to measure the ratio of clicks to impressions of an online ad or email marketing campaign. Generally the higher the CTR the more effective the marketing campaign has been at bringing people to a website. Most commercial websites are designed to elicit some sort of action, whether it be to buy a book, read a news article, watch a music video, or search for a flight. People rarely visit websites with the intention of viewing advertisements, in the same way that few people watch television to view the commercials.[3]

While marketers want to know the reaction of the web visitor, with current technology it is nearly impossible to quantify the emotional reaction to the site and the effect of that site on the firm's brand. However, click-through rate is an easy piece of data to acquire. The click-through rate measures the proportion of visitors who initiated an advertisement that redirected them to another page where they might purchase an item or learn more about a product or service. Forms of interaction with advertisements other than clicking is possible, but rare; "click-through rate" is the most commonly used term to describe the efficacy of an advert.[3]

Construction

The click-through rate is the number of times a click is made on the advertisement divided by the total impressions (the number of times an advertisement was served):

Click-through rate = Click-throughs (#) / Impressions (#)[3]

Online advertising CTR

The click-through rate of an advertisement is defined as the number of clicks on an ad divided by the number of times the ad is shown (impressions), expressed as a percentage.[3][4][5][6][7][8] For example, if a banner ad is delivered 100 times (100 impressions) and receives one click, then the click-through rate for the advertisement would be 1%.


\text{CTR} = {\text{Clicks} \over \text{Impressions}} \times 100

Click-through rates for banner ads have fallen over time. When banner ads first started to appear, it was not uncommon to have rates above five percent. They have fallen since then, currently averaging closer to 0.2 or 0.3 percent.[9] In most cases, a 2% click-through rate would be considered very successful, though the exact number is hotly debated and would vary depending on the situation. The average click-through rate of 3% in the 1990s declined to 2.4%–0.4% by 2002.[10] Since advertisers typically pay more for a high click-through rate, getting many click-throughs with few purchases is undesirable to advertisers.[9] Similarly, by selecting an appropriate advertising site with high affinity (e.g., a movie magazine for a movie advertisement), the same banner can achieve a substantially higher CTR. Though personalized ads, unusual formats, and more obtrusive ads typically result in higher click-through rates than standard banner ads, overly intrusive ads are often avoided by viewers.[10][11]

Modern online advertising has moved beyond just using banner ads. Popular search engines like Google and Bing allow advertisers to display ads in with the search results triggered by a search user. These ads are usually in text format and may include additional links and information like phone numbers, addresses and specific product pages. [12] This additional information moves away from the poor user experience that can be created from intrusive banner ads and provides useful information to the search user, resulting in higher Click-through rates for this format of Pay Per Click Advertising. Having high click-through rate isn't the only goal for an online advertiser who will occasionally develop campaigns to raise awareness and sacrifice click-through rate for the overall gain of valuable traffic.[13]

Email CTR

An email click-through rate is defined as the number of recipients who click one or more links in an email and landed on the sender's website, blog, or other desired destination. More simply, email click-through rates represent the number of clicks that your email generated.[14][15]

Email click-through rate is expressed as a percentage, and calculated by dividing the number of click throughs by the number of tracked message opens.[16][17]

Most email marketers use this metrics along with open rate, bounce rate and other metrics, to understand the effectiveness and success of their email campaign.[18] In general there is no ideal click-through rate. This metric can vary based on the type of email sent, how frequently emails are sent, how the list of recipients is segmented, how relevant the content of the email is to the audience, and many other factors.[19] Even time of day can affect click-through rate. Sunday appears to generate considerably higher click-through rates on average when compared to the rest of the week.[20]

Every year studies and various types of research are conducted to track the overall effectiveness of click-through rates in email marketing.[21][22]

See also

References

  1. ↑ American Marketing Association Dictionary. http://www.marketingpower.com/_layouts/Dictionary.aspx. Retrieved 2012-11-02. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language in Marketing Project.
  2. ↑ Wasserman, Todd. "This Is the World's First Banner Ad". Mashable. Mashable. Retrieved 11 September 2015.
  3. 1 2 3 4 Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0-13-705829-2. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language in Marketing Project.
  4. ↑ Google AdWords Help: Clickthrough rate (CTR)
  5. ↑ Yahoo Search Marketing Glossary
  6. ↑ IAB Click Measurement Guidelines
  7. ↑ Google Analytics Help: What's the difference between clicks, visits, visitors, pageviews, and unique pageviews?
  8. ↑ IAB Glossary of Interactive Advertising Terms
  9. 1 2 Stern, Andrew (February 1, 2010). "8 ways to improve your click-through rate". iMedia Connection. Retrieved February 7, 2010.
  10. 1 2 Li, Hairong; Leckenby, John D. (2004). "Internet Advertising Formats and Effectiveness" (PDF). Center for Interactive Advertising. Retrieved 26 February 2010.
  11. ↑ US application 20,090,157,495
  12. ↑ Carter, Josh (August 30, 2014). "Google AdWords Management:Understanding Click-Through Rate". Your Clicks. Retrieved August 30, 2014.
  13. ↑ "Email Campaign Performance Metrics Definitions". Retrieved December 18, 2012.
  14. ↑ Kevin Gao. "Click Through Rates: Click Through Rates Numbers and Their Meaning". Retrieved December 18, 2012.
  15. ↑ "The Basics of Email Metrics: Are Your Campaigns Working?". October 2008.
  16. ↑ John Arnold (April 2011). "Calculating the Click-through Rate for Your E-Mail Marketing Campaign from E-Mail Marketing for Dummies, 2nd Ed.".
  17. ↑ "Email marketing metrics: Click through rate (CTR) relevant to email marketing measurement". January 17, 2010.
  18. ↑ "Average Email Click-Through Rate". Retrieved December 20, 2012.
  19. ↑ Pete Prestipino (July 21, 2011). "EMail Marketing Metrics 2011".
  20. ↑ Matt McGee (July 23, 2012). "E-mail Open Rates Declining, Click-Through Rates Rising [Study]".
  21. ↑ David Moth (July 24, 2012). "Email marketing stats: consumers open just 20% of messages".

Further reading

External links


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