Click through rate (CTR)

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Click through rate (CTR) is the ratio of "number of times an ad is clicked" and the "number of impressions of the ad". For example, an ad that is displayed 1,000 times and receives 10 clicks has a click-through rate of 1%.

A higher CTR indicates that the ad is successful in capturing the person's interest and generated traffic to the company's home page or the landing pages. It is one of the metrics to judge the effectiveness of an ad campaign. However, it is not the only metric. An ad is successful if it resulted in a purchase or acceptance of the offer presented in the landing pages. Therefore, CTR in conjunction with conversion rate is a more accurate measure of the success of an online ad campaign.

It is important to distinguish what a click-through rate does and does not measure. The CTR measures what percentage of people clicked on the ad to arrive at the destination site; it does not include the people who failed to click, yet arrived at the site later as a result of seeing the ad. As such, the CTR may be seen as a measure of the immediate response to an ad, but not the overall response to an ad. The exception involves ads that display no identifiable information about the destination site; in these cases the click rate equals the overall rate. Merely getting visitors to a site had value when web site traffic was generally accepted as a measure of success. The trend towards profitability, along with better tracking tools, has resulted in less interest in click through rates and more interest in conversion rates. A high click through rate does not assure a good conversion rate, and the two rates may even share an inverse relationship. An advertisement geared towards curiosity clicks will result in fewer sales, percentage-wise, than an advertisement geared towards qualified clicks.[1]

There is no consensus on what is a good CTR as the CTR mainly depends on keywords used and the brand itself. 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.[2] 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 0.1%-0.3% by 2011.[3]

[1] Click through rate - Marketing Term [1]

[2] iMedia connection [2]

[3] Li, Hairong; Leckenby, John D. "Internet Advertising Formats and Effectiveness". Center for Interactive Advertising. [3]

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