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?

Google Advertising – Google AdWords Launches Improvements to Ads Quality

November 5th, 2008 by Mike Tatge

Last week Google AdWords announced improvements to Ads Quality, and today that update went live. Two new changes have been introduced that enhance how Google calculates Quality Score and Ranks Ads.Google Improves Ad Quality

As you might know, click through rate (CTR) is arguably the most significant component of Quality Score, and ads in higher positions tend to earn better CTR than ads that display in lower positions. Google decided that to accurately calculate the Quality Scores, the “influence of ad position on CTR be taken into account and removed from the Quality Score.”

As a result, Google has now updated the portion of the Quality Score algorithm that accounted for ad position. It is their belief that this new adjustment will result in a more accurate Quality Score and ensure that ads compete fairly for position based on their quality and bid, while rewarding high-quality advertisers with better ad positions.

In the past, here at JumpFly, we have certainly seen the advantage of placing some clients’ new keywords in prominent positions to start, and then pull them down later based on performance. The advantage of the increased CTR from the higher initial positioning would work to their advantage down the road. From the sound of this latest update, this particular strategy may no longer be necessary. It will be interesting to see.

The second update going live today is an “improvement” in the way Google determines which ads show in the prominent yellow region directly above the search results. Google believes that given the prominence of these positions that it is especially important for ads to be high quality. Therefore, to appear above the search results, ads must meet a certain quality threshold.

You may have noticed that sometimes Google chooses not to display any ads in this position. Previously, if the ad with the highest Ad Rank did not meet the necessary quality threshold, they would not show any ads in these positions. With the new update, Google will now allow an ad that meets the quality threshold to actually jump over an ad in a higher position and be displayed in this prominent position. Again, quality plays a very important roll in being able to show in higher positions.

There is no doubt that these new algorithm changes by Google will cause some ads to experience a change in position, spend, and/or performance. Changes in Google’s ranking algorithms can affect even the most stable Google AdWords PPC account. Talk to a professional PPC Management Company today about how this recent update might affect your Google AdWords account.

Google AdWords – AdPreview Tool

July 30th, 2008 by Nikki Kuhlman

Imagine you want to check your placement on the search engines so you walk up to your computer, go to www.google.com and type in your password. You’re not there or you are but in a much lower position than normal. Yipes!  What’s wrong with my PPC advertising?

PPC AdvertisingRelax – it’s easy to panic, but before you think calamity struck and your account is offline or your competitors have supplanted your position, there might be another explanation…

Google tracks IP addresses. Google does this for lots of reasons, one being to help prevent click fraud. If you repeatedly do searches on the same or similar terms on google.com, Google will stop showing you the results that the average person who searches on something the first time sees. I can’t tell you how many times I get a client in a panic (or mad) thinking their account has stopped working.

It used to be that you could clear your cache and history and things would go back to “normal” for awhile, but then Google got smart and created a tool called Google AdPreview (luckily they made it easy to remember: www.google.com/adpreview). Using Google AdPreview, you can do a search and accurately see what a normal searcher sees. What’s even better is that you can specify countries, states, metro areas, even cities, so you can see local results too. It really helps me as an account manager, because I can see accurate results for my geotargeted clients, whether they are targeting the Houston metro area, or the state of California, or Monmouth County NJ, when I’m right here in the Chicagoland area.

An added benefit of the Google AdPreview tool is a very important one: every time you do a search on one of your keywords and you see your ad, you are negatively impacting your Click Through Rate (CTR). How? Because you searched, your keyword registered an impression, and you didn’t click on your ad (which you wouldn’t want to do, because it costs you money) which in turn lowers your CTR. It’s not a big deal if it’s one or two times on a keyword that get loads of impressions, but what if you are in a very niche market with keywords that get very few searches. Your one impression with no click can affect your CTR way more than you intended.

So Google AdPreview (www.google.com/adpreview) – memorize it (or bookmark it), use it, love it!