Click-Through Rate Explained: What’s a Good CTR? (+ Tips for Improvement)

Click-through rate (CTR) is a ratio comparing the number of clicks an ad receives to the total number of its impressions. A good CTR can range from 4% to 10%. Read on to learn more about how to improve yours.

The key to a terrific PPC ad campaign is keeping a close eye on the data. But there are so many metrics to track and analyze – so which ones matter most?

The answer? Click-through rate.

Click-through rate — or CTR — is far and away the most important metric to monitor for ad performance. A good click-through rate indicates that your ad resonates with your target audience. And a low one signals that you need to rework your ad copy or adjust your targeting.

In this article, we’ll break down what click-through rate is and why you should care about it. We’ll also look at benchmark CTRs across industries to serve as benchmarks and explore the factors you can use to improve click-through rate in your PPC campaigns.

Ready? Let’s go.

What is click-through rate?

Click-through rate (CTR) is a ratio comparing the number of clicks an ad receives to the total number of impressions.

Click-through rate is simple to calculate:

CTR = Clicks / Impressions

For example, if an ad is seen 1,200 times and clicked 90 times, the CTR would be as follows:

CTR = 90/1200

CTR = 0.075

Click-through rate is normally expressed as a percentage. In the above example, the CTR would be 7.5%.

What’s the role of the CTR in digital marketing?

CTR is an essential metric for improving your digital marketing efforts. It’s the starting point for understanding which ads are working and which ones aren’t.

Click-through rate helps you understand how many people are engaging with your ad, as a percentage of everyone who views it. The higher your CTR, the more people are taking action: visiting your landing page, signing up for your newsletter, or purchasing your product.

And a high CTR can also boost your ad’s Quality Score – so you can drive down ad costs and secure better ad placements.

By optimizing your CTR on an ongoing basis, you can create more effective ad campaigns that improve your website traffic and overall campaign ROI.

Why CTR is essential for Google Ads performance

Let’s take a look at the key reasons why you should be optimizing your campaigns for a higher CTR:

1. A high CTR indicates user engagement

CTR is the single most effective indicator of campaign engagement.

A high CTR might mean that your ad is reaching the target audience in a compelling way… or it might mean your ad is so compelling, you’re generating interest with people outside your target demographic.

Either way, a high CTR means high engagement. And an engaged audience brings endless benefits to your business: more repeat purchases, more word-of-mouth referrals, and more positive reviews.

Whether you’re a retail business, an industrial manufacturer, or a tech company, building an engaged audience will improve your bottom line.

2. High CTR has SEO benefits

Optimizing your marketing campaigns for click-through rate also improves your company’s rank in Google and other search platforms.

Google’s SEO algorithm takes thousands of factors into accounts. But the bottom line is simple: good content wins. CTR is a key metric Google uses to determine the quality of your ad.

Google rewards ads that are engaging, relevant, and useful with a higher ad rank on search engine results pages (SERPs) – and often lowers the cost of pay-per-click ads based on outstanding ad quality.

Improving your ad position can help you drive far more impressions for your ads. And that can often mean you’ll see a consistent or even rising CTR – despite a much larger audience.

You can also optimize your ad for SEO by incorporating ad extensions. They’re a great way to provide viewers with useful information, expand your screen real estate, and improve your ad’s SEO.

Click-through rate and SEO go hand-in-hand. The better your CTR, the more your SEO will benefit – and vice versa.

3. A high CTR improves your return on ad spend

Optimizing your CTR enables you get a much better return for your advertising dollar.

It’s simple. Every time someone clicks through on your ad, you get another opportunity to get a sign-up or make a sale.

Here’s how driving a higher CTR improves your ROAS:

• Development costs are fixed. The cost to develop a campaign remains the same, no matter how many people see or click on your ads. Once you’ve made the initial investment for visual design and ad copy, you have a campaign asset that can be used to generate ongoing revenue at no additional cost.
• A high CTR can lower your CPC. A great CTR is one of the key metrics Google uses to determine ad quality. Google rewards engaging advertisements with higher Quality Scores that come with a lower cost-per-click – so the more engaging your ad, the less you’ll pay for every click.
• User engagement increases brand awareness. 82% of consumers prefer to buy from brands they know. Driving more impressions and interactions helps build brand familiarity with your brand – leading to more conversions and sales.

Factors that can impact your CTR

Click-through rate ultimately measures how engaging your ad is to users – and that means many factors impact your CTR. Here are some of the most important:

• Ad targeting: Targeting your ad for the right audience is critical. It doesn’t just improve CTR, but also conversion rates and your overall campaign ROI. Whether you’re using Google Ads or another platform, be sure to use the platform’s targeting tools and do thorough SEO research to get your ads in front of the right people.
• Ad design: Eye-catching creative can go a long way in our always-on world – so craft clear, attractive, easily readable campaign visuals. Develop clear, simple messaging that drives curiosity and compels the user to learn more.
• Clear call to action: Effective ads drive action. If users aren’t sure what to do next, or if they don’t know where a click will take them, they’re less likely to click your ad. Use an extremely clear CTA to keep users moving through the buyer’s journey.
• Ad format and placement: Your ad format is location where you place your ad (website, social media, search engine), while your ad placement is the specific platform you choose. Choose wisely. If you’re looking to sell shoes to teens, you won’t want to opt for LinkedIn ads. Likewise, if you’re trying to sell industrial products, Instagram ads is probably not the place for you.
• Exposure quantity: Too much of a good thing can easily become a bad thing. Don’t run ads too frequently and overwhelm your audience. Close analysis of the data will help you track what works for your product or service.

With all digital marketing efforts, good analysis is the core of good results. Here at HawkSEM, we utilize a proprietary software called ConversionIQ for data tracking.

We built it from the ground up to deliver deeper insights than other marketing analytics tools on the market. And that means our team has all the tools they need to assemble expertly crafted PPC campaigns.

What’s a good CTR for Google Search and display ads?

To give you a solid basis for your PPC ad marketing strategy, let’s look at CTR benchmarks for Google Ads, Facebook, and LinkedIn.

Google Ads

Google Ads is the single biggest online advertising platform. Almost 30% of revenue generated from digital ads in the US comes from Google Ads. The average CTR for Google ads is just below 5% across industries.

However, Google Ads offers two primary ad types: search ads and display ads. Google search ads pop up when users are actively searching, while display ads can show up in a variety of more passive spots.

CTRs for display ads are often much lower, since they tend to be perceived as more intrusive and pop up in lower-intent places. There are also significant differences in industry averages.

Source: CXL

Arts & entertainment, travel, and sports & recreation draw the highest CTRs for search ads, while real estate, beauty & personal care, and automotive industries see the highest CTR for display ads.

Facebook

Outside of Google, Facebook is the biggest player in the PPC ad space. Facebook ads offer significant individualization, which means it’s important to consider factors beyond platform benchmarks in mind when you’re setting goals.

The average click-through rate for Facebook ads across all industries is 1.49%. But like Google Ads, Facebook ad CTRs vary from industry to industry.

(Source: Databox)

Apparel & footwear and e-commerce ads pull in the highest CTRs on Facebook Ads. The highest-performing industries on Facebook Ads differ from those on both Google and LinkedIn – so look at industry benchmark indicators when you’re developing campaign strategy.

LinkedIn

LinkedIn ads are ideal for sectors that appeal to business professionals – but the click-through rates tend to be considerably lower than on other platforms.

With that in mind, the average CTR is around 0.62% across companies. Here’s a quick look at some of the CTR variations between industries.

(Source: Databox)

LinkedIn also offers variations in ad format. Data has shown that some formats perform better than others, with text ads and sponsored video content pulling the highest CTRs. Standard dynamic ads and sponsored InMail content seem to have the lowest results.

Making sense of industry benchmarks

Platform benchmarks can shed some light on user intent and engagement, but to get a clearer picture of typical click-through rates, you need to look at industry benchmarks.

But why are click-through rates so different across different industries?

• Search intent differences: It all depends on why users are searching. In some industries, users are looking for general information. In others, they’re ready to make a purchase. If you’re searching because you’re ready to buy, you’re more likely to click on an ad.
• Market saturation: Some industries are highly saturated, making it extremely difficult to get in front of customers even with an outstanding ad. E-commerce is a classic example. With lots of advertisers competing for viewer attention, it’s especially challenging to achieve a high CTR.
• Ad spend: Industries that tend to have tighter marketing budgets also tend to see lower click-through rates. For example, according to the Wall Street Journal, transportation, manufacturing, and energy companies don’t spend much of their budget on marketing – and it’s no surprise they also tend to have a pretty low CTR.

Can high CTRs be bad for business?

Click-through rate isn’t a panacea. Driving tons of clicks to an ad with a low conversion rate will light your ad spend on fire.

Here at HawkSEM, we’ve seen situations where a high CTR has done more harm than good:

• Clickbait: We all roll our eyes at too-good-to-be-true results, right? If you make promises you can’t fulfill, you’re ultimately doing major damage to your brand. Only make promises you can deliver on.
• Poor landing pages: Users tend to click away when the landing page doesn’t match the quality of the ad. Ensure that your landing page is as compelling, relevant, and useful as your ad — or your conversion rates will suffer.
• Ineffective targeting: Targeting the wrong prospects is another common cause of low conversion rates. If your ads for “deep dish pizza” are targeting Brooklyn residents, you’re flushing money down the drain.

A high click-through rate paired with low conversion rates and sky-high bounce rates are a telltale sign that there’s a disconnect happening between your ads and your landing page.

The expert PC marketers at HawkSEM understand the importance of structuring PPC campaigns strategically for success. Our PPC experts worked with Wind River, a leading SaaS company, and saw a CTR increase of 300%.

And this CTR increase helped Wind River grow its user base by 40% – proof positive of the value of PPC ads to drive action.

Keep an eye on all your key performance indicators (KPIs) to ensure you have a holistic digital marketing plan. Boosting your CTR at the expense of your conversion rate is a surefire way to flush thousands of dollars in ad spend down the drain.

The takeaway

Click-through rate is the single most important metric you can measure to assess the effectiveness of your ads. It gives you a clear snapshot of how engaging your ads are. And it directly correlates with SEO performance and return on ad spend.

Achieving a good CTR is simple, but not easy. If you’re looking to level up your PPC results, partnering with an expert team can help you drive better ad performance fast without wasting months learning the basics on your own.

Here at HawkSEM, PPC is our core focus. Our team of PPC experts specializes in creating individualized, performance-driven campaigns that perfectly fit your company’s needs.

We’d love to help you take your PPC efforts to the next level. If you’d like to chat with the team at HawkSEM, schedule a free consultation here.