How well are your ads doing? (CTR)
Click Through Rate (CTR) is the ratio of clicks to impressions calculated as a percentage. CTR is one of my primary KPIs in every campaign that I run, regardless of industry. It gives a ton of insight into how well your ads are communicating the message about the service that is being offered.
What is a good CTR?
What makes a good CTR is going to depend on the industry, and the service offered. I typically use a benchmark of 1% to determine where my campaigns are at, but that 1% is just a tool to scale up or down from. There are tons of variables to consider, but there are 2 main ones that I always keep in mind; volume and demand.
Let’s take Nike for example. Nike may run an ad for a brand new running shoe (get it...RUN an ad!). The campaign is geared towards an english speaking American audience. I’ll be conservative and say that is 250 million. A CTR of 0.75% on that campaign might be great! That is 1,875,000 clicks over to a page. Now of course things like campaigns costs, profit per sale, and cost per click would have to be looked at more closely to determine how profitable the campaign actually is, but getting the entire population of San Antonio, TX to your page to buy something is a great start.
Demand can also influence CTR is big ways. Real Estate Investing is a perfect example of demand impacting CTR numbers. In REI, there is a specific clientele with a specific need attached to selling their home. As an advertiser, I know that I’ll be using very specific keywords and ad text in order to sift through who really needs the service and who is just “kicking tires”. There are about 1.5 million people in San Antonio, TX. I’ll be generous and say that 600,000 are homeowners. Since almost 33,000 people sold their homes last year, I’ll say that 2,750 home sale transactions take place a month. At a 2% CTR monthly (on the low end), that would be 55 people that are interested in the service. If 5 of them opt in, that could be $55K if you’re wholesaling, and more if you’re flipping.
Do some analysis on your industry. Look at demand, volume, costs per click, and give yourself some breathing room with estimating what the CTR should be. If you’re finding it tough to figure out what you think it should be, just use my 1% rule. Set that as the goal, and then compare your actual results with it. The higher the volume, the lower the CTR will likely be. The lower the volume, the higher the CTR that you should expect.