Clickthrough rate (CTR) is calculated by dividing the total amount of mouse clicks on an advert divided by the percentage of times the specific advert is shown online. The times an advert has been shown are referred to as impressions, by internet marketers. Because this ratio enables advertisers to know how many people have clicked on their ads, the Click Through Rate is an effective way to measure the productivity of a particular advert and the keyword that it contains.
This is particularly important, because if a website targets wrong keywords, it will not attract visitors, no matter how high the quality of its content and products is (www.seomoz.org).An advert that has a high CTR ratio is obviously a successful and effective ad,as the ratio indicates that internet users find it relevant and helpful. In addition, CTR contributes to the advert keyword’s Quality Score. This can significantly affect advertising expenses and the advert position. In this respect, CTR can be used toassess which keywords and adverts need to be improved (those with a low CTR percentage).
The CTR average for all industry sectors is 2 – 2,3. Nevertheless, this can vary depending on the situation and industry segment. The CTR average for the electronics industry, is just 1.1%. On the other hand, catalogue e-tailers’s CTR average is 6.1%, because of the significant amount of visitors that is redirected from the catalogue to the site to make a purchase). The CTR of banner adshas significantly decreased over time, from an average of 5% to the current state, where most banner ads now enjoy rates close to 0.2 or 0.3%.
A number of ways have suggested to improve CTR rates, using modify and improving the site’s format, layout, design, usability, navigation. In addition modifying the stock and the price of the products offered by the website can also increase the CTR of a particular site. Readjusting the pricing, stock, and other elements to the specific characteristics of the site, and using a number of online advertising solutions to increase the website’s traffic can also prove to be very beneficial. Stern (2010) identified the main ways used to increase CTR rates.
Creating interesting ad banners, using a variety of creative devices, outsourcing creative work to professionals and an everyday assessment of rates are the main initiatives that can be used to improve ad performance in this respect. Stern, who is president of the advertising company Seed Corn Advertising, argues that analysing advertising campaigns daily can prove to be significantly beneficial, as advertisers as even if the ads’ CTR is not high, advertisers can then implement ways to optimise the creating aspects of the campaign, as well as redirect its targeting to improve its effectiveness.
Also, daily analysis of this ratio can enable the advertiser to determine which measure are working and which are not directly after their implement. The outsourcing of the creative process, can also provide a significant number of advantages for the advertiser, as it can provide with ad banners that use a wide variety of creative techniques and devices as well as with professional pieces of work created using specialised devices and technology that may be unknown to the advertiser.