Click Through Rate (CTR) as a Benchmark

January 9th, 2009 by Mike Tatge

According to Google, “Click Through Rate (CTR) is the number of clicks your ad received divided by the number of times your ad is shown (impressions).”

Every once in a while a new pay-per-click (PPC) advertising client will come in who considers their account CTR to be the benchmarkIs CTR a Valid Benchmark? by which their accounts performance is judged. Depending on the keyword strategy, it is most likely not a good idea to use CTR to judge an entire account’s performance.

True, we know that CTR has a big influence on the somewhat mysterious Google AdWords Quality Score(s). It is also a great indicator for comparing performance on your various AdGroups’ different ad copies. There are certainly many instances when Click Through Rate (CTR) is a very good indicator of performance.

Now, what about when low CTR is a good thing?

There are definitely times you want to eliminate a worthless click from a potential keyword, and while this would have a negative impact on the Click Through Rate (CTR) it would certainly have a positive effect on the account.

For example, a strategy that I recently adopted for a client really drives this point home.

One of my client’s competitors has a very common word for a company name. For the sake of confidentiality I will simply call it “widget.” Well, this competitor name “widget” is also the name of a very popular movie, an artist, a location overseas, a highway landmark, and dozens of other completely unrelated things. As you might imagine, the search volume for this popular term is through the roof, while the percentage of people actually using it for the company name we wished to target is extremely small. So small in fact, that it would almost certainly discourage anybody from even trying it as a keyword.

I thought it was worth trying, and to give it the best chance at success I used only the exact match version of “widget” in its own campaign, with a very specific ad designed to only solicit the searchers looking for my client’s services.

The results were surprisingly great. The campaign resulted in my client converting at half of his target conversion cost. The CTR for this keyword was a downright horrible 0.02%, however this was a good thing as it meant the ad was eliminating all of the unnecessary searchers and only targeting the exceptionally small amount of people looking for my clients competitor. In this case, the exceptionally low CTR was a good thing.

The low CTR also had a definite impact on the keyword’s quality score and forced my client’s minimum bid up to $10/click. Even with the the high minimum bid, the conversion cost was cheap and the quality of leads generated tens of thousands of dollars in new revenue for my client. Winner.

Now, the 0.02% CTR dramatically lowered the whole account’s CTR. If that figure had been used as a benchmark to judge performance, it would have been a huge mistake that would have cost my client a considerable amount of revenue. In this case, the actual conversion cost/rate was a far better benchmark than the pathetic CTR.

The bottom line here is that a low CTR can be a good thing in some strategies and is not always the best indicator of an entire account’s performance. Every account is different, just as every marketing strategy is different. Helping to determine the best strategy for your PPC marketing campaign is just one of the many unique skills that JumpFly PPC account manager¬†brings to the table.

What’s your benchmark?

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