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How to use this calculator‍

Input your clicks and ad impressions in the green cells above. The yellow cell is a formula that calculates the CTR.

CTR Beyond Ads: How To Use The CTR-Principle Elsewhere In Business (Even If You Are Not a Marketer)

Today, we are looking at the clickthrough rate. The math and technical terms of online marketing can feel overwhelming but fear not, we’ll break it down together.

The clickthrough rate is the relationship between how many people saw your ad and how many click it. To calculate it, we simply take the number of clicks and divide them by the number of views.

Not every one that sees an ad will also click it, so an easy rule of thumb is to divide the lowest number (clicks) with the highest number (views).

Example: 10 clicks divided by 100 views = 0.10.

And then we multiply that by 100 to get the percentage = 10% CTR.

The reason we care about the CTR in our campaigns is that when we can increase it, we’ll often notice that it drives down our cost per click. That is due to a component called Google’s Quality Score (more on that later in this guide).

We are likely to also increase the number of people that convert from prospect to sale because our ad position will be improved too. The ad position represents how high up our ad is placed on the page as shown below. 

Ultimately, that is nice because people have seen fewer ads before seeing ours so they are considered ‘fresher’ and more likely to interact with it. Remembering that CTR is simply the relationship between clicks and views, we can use it for other aspects of our promotions.

The clickthrough rate is usually calculated when running online ads but can also be used with a variety of things:

• Reading an article vs. clicking its link to another page
• Opening an email compared to clicking the links in it
• And you can even think of your email open rate as a CTR - how many people saw your email in their inbox compared to how many clicked to read it
  

Most marketers use it for paid media but you don’t hear much about it in organic content. Think about when your team writes guest articles for other websites- wouldn’t it be nice to understand which of them did well and which ones didn’t so you can replicate the good ones?

It is simply a way to measure the engagement and you can apply that principle everywhere in your business where you are able to track the number of views and engagement.

Part 1 - Are You Overpaying For Your Ads?

How CTR Affects The Cost of Your Ads (And The Only Factor That Actually Matters In Your Campaigns)

So many people dislike ads, let’s look at social media for example. This survey shows:

• 74% of people think there are too many ads on social media
• 63% of users say they only see a few things advertised, over and over again
• 44% of users find the ads irrelevant to their wants and needs
  

The perhaps most important factor for whether our promotions work well or not is relevancy as it tends to drive more clicks and interest.

Imagine, if you are looking for a new pair of high heels, and someone shows you an ad for a pair you’ve been dreaming about with a 20% discount. Wouldn't you be excited? 

Or if your favorite sports team suddenly has season tickets on sale? Wouldn’t you prefer to hear about that 30% discount before you buy your ticket?

The challenge comes down to the fact that we see many ads that aren’t relevant to us. That’s what the leading publishing businesses work on solving.

For example: Facebook trying to teach us that by showing us how our CTR is connected with CPM (cost per 1000 ad impressions). 

Even though we usually measure the performance of our ads in many different ways (e.g. cost per sale, cost per lead or cost per action), they offer us to pay per 1000 ad impressions.

Companies like Google and Facebook created each of their own systems to correlate the relevance of our ad with pricing because they know that the most relevant ad will perform the best and make their users the happiest.

They use many metrics to calculate that. The more prospects click on an ad, the more likely it is to be relevant for those seeing it and thus they reduce the price we pay for it.

Keep in mind that this is a simplified explanation and that there are many other metrics involved in calculating that beyond CTR such as how fast the website loads and which device users are using.

Making something simply good enough and then moving on is the way to go (you can use the industry standards later in this guide).

While it is not always the case, you might encounter starting out paying a high price (CPM) but as your CTR improves, you’ll notice not only performance getting better but also the cost per 1000 ad impressions can become cheaper - as shown in this example:

Below is an example that shows how the opposite can happen too: as the days go by the CTR decreases and the cost increases.

The Difference Between Ads With High- And Low CTR: An In-depth Comparison

In this chapter, we are looking at different ad examples and comparing the difference between ads with low and high clickthrough rates on the popular platforms Google search ads (formerly known as Adwords) and Facebook ads.

If you don’t care as much about the examples and want to learn more about what you can do on your own, click here to learn how an ad account is audited.‍

An ecommerce store using Google search ads

Below is an example of two Google search ads selling washers of different materials. A washer is a small ring that is used inside mechanical devices to reduce noise.

Calculating the cost per click (dividing the number of clicks with the cost) for both ads tells us that they get clicks for about $0.30 each.

The ad text available is limited but looking at the headline and description we can see they use different features of product or store to attract people. 

The ad at the top (with the lower CTR) focuses on the fact that the product is manufactured in the USA and made of good quality with a wide selection of sizes and shapes.

The other is performing better with a CTR about twice as high. It puts focus on just how large a selection the customer has to choose from and emphasizes the point using a number that helps make the message clear (e.g. 410,000 different sizes).

Even with a cost per conversion that is about the same for both ads ($75), the ad with the higher CTR gets double the number of targeted people to the website. 

Even if they don’t buy right on the spot, they are captured by the business’ other marketing flows. Some marketers like to retarget the visitors that didn’t buy on different platforms like Facebook based on which pages they visited on the online shop. 

For example, if they visited certain product pages or pricing pages your business can automatically retarget them on Facebook or persuade them to sign up for your email newsletter.

Then next time you have a sales campaign, you have all these new, qualified leads that are interested and already know your brand a little bit.

These washers are likely used by craftsmen or a handyman and aren’t something you and I would impulsively buy just for fun.

The target group has a particular use for them which is why Google search ads are a great fit - they are looking for them and typically know what they need.

For each job they do, they likely need very specific sizes and shapes. Each one fits their unique device, so a wide selection is attractive to this target audience.

While we are at it, let’s look at another ecommerce example. This time for desks: 

In the screenshot below, let’s ignore the ad in the middle as it is a ‘responsive’ search ad. An ad format that behaves differently than typical search ads even though they appear similar.

That means the performance is going to be different too. Rather, let’s focus on comparing the top and bottom ads.

This business is selling desks with adjustable heights (rising desks). Whether these desks are bought by an individual or an employee on behalf of a company, it is likely the same type of person that would be interested in it.

We can see they both achieve about the same cost per click (CPC) yet the top ad has about 3x the CTR than that of the bottom ad. Since we don’t have the number of conversions, we can’t judge which one is converting better, so let’s assume it is the same for the sake of the example.

The features talked about in the top ad (the one with the higher CTR) are more focused on the actual desk itself (e.g. it has easy to use back-lit push-button control). 

Whereas the bottom ad focuses on features related to the purchasing process rather than the actual product (e.g. speak with a local rep today, live product demo, etc.).

The top ad might be focused on consumers and individuals purchasing whereas the bottom ad is more focused on targeting corporate buying departments. 

In some cases, it does make sense for the business to run both ads targeting the same keyword because both types of buyers use it when searching on Google - even if their needs are different.

From ecommerce on Google search, let’s dive into some lead generation campaigns that often require someone to sign up for something and then later complete another action such as a phone call with a sales rep. 

In this next example, the topic is personal quick loans for individuals.

Google search ads - Lead generation

Both ads come in at about $1.5 cost per click yet the top ad has a CTR that is 4x-5x stronger than the bottom ad.

One major difference between the two ads is that the top one is using something called Dynamic Keyword Insertion (the “{KeyWord}”-part of the headline) which means that Google helps insert the phrase “Get Instant Personal Loans” into the headline based on certain criteria. 

While we won’t know if it actually makes a difference until we run a test that isolates only that element, it is common that it outperforms static headlines because it allows for a more relevant, live updated ad based on the user’s search.

Besides that, both ads display similar features of the service they offer. However, the top (and best performing one) one focuses more on what’s required to get the loan along with the cost of it, whereas the other ad focuses on where the customer gets the loan from and that they can select between different vendors.

One last point is that the top ad focuses on ‘get the loan’ compared to the second one focusing on ‘apply for the loan’. If you were to take up a loan from one of these ads, which one would you rather click on?

Let’s move on to Facebook ads. This ad platform is slightly different from Google search ads as people generally don’t have much intent to buy anything when they log in. 

Rather, they are bored, wanting to see what their friends and family are up to, so here we have to work for them to understand why they should care about the ad too.

With Google search ads, they are already looking for something specific so on the surface, it appears obvious that we want to spend our ad budget there. 

However, for exactly that reason Facebook is often much more affordable than Google search and thus can potentially offer you better returns. None is simply better than the other- it depends on your situation.‍

Facebook ads - Ecommerce

This first example is for an ecommerce store displaying two different couches. As you might have noticed, the first of the two has double the CTR.

Comparing these two ads shows us a great example of how the product itself sells less than the benefit it offers to the customer.

As we can see, both ads have the same short text. At first, the two images even appear similar. However, the top, and better performing, one gives us a better grasp of the whole living room -with the couch inside- whereas the lower performing one has more focus on the couch itself.

What most people are buying here isn’t the couch itself. They are buying what the couch can do for their home - whether the customer wants a modern, cozy living room for themselves or if they want their home to look and feel a certain way when they have guests coming. 

It displays a feeling and a particular lifestyle that the couch is a part of - rather than just a couch itself. Particularly, with plenty of natural light coming in through the window and the walls surrounding the window being covered in tiles that appear rustic yet modern.

This is a good example of how A/B testing different approaches can improve your advertising performance tremendously.

Let’s move from ecommerce examples to lead generation with Facebook ads.

Facebook ads - Lead generation

This campaign is using dynamic creatives meaning that they have uploaded a few different ads (text, images, etc.) and Facebook will rotate them to find the one that performs the best.

As we can see in the screenshot, one ad has a CTR performing 2x better than the other. They are both leading to a webinar and the main ad text (at the top of each ad) is pretty much the same except for the first line and the emojis. Let’s look at their differences.

The headline is the same (Facebook is one of the few platforms that places the headline below the image and main text and next to the ‘sign up’-button). Below the headline, each ad is using different social proof to show how many other people are interested.

Social proof typically works well on ads because it stems from the fact that we are interested in what other people are interested in. 

The bottom, and better performing ad, shows that 900 similar people have signed up for this particular webinar where the other ad shows that more than a million people have been trained in the past.

Without testing, we can’t know for sure if that is causing the second ad to perform better. However, it likely is because both ads are talking about a webinar today - so it helps convey the current interest for this specific event.

I’ve saved this one key point for last:

One ad is using an image and the other, a video. We don’t know what is going on in the video so let’s ignore that element.

The video gives the lead more exposure to the business, which tends to offer more relatability and awareness. That is more likely to get us to trust what that person has to say. If nothing else, simply because we spend more time listening to someone on a video rather than an image.

That doesn’t always mean videos win though. As we can see, there is text in the image-ad and a much larger headline that anywhere else in that type of ad format. 

That surely helps grab attention in the first place but what the video ad might lack in grabbing attention it makes up for through engagement - hence the 2x CTR.

Part 2 - Are Your Competitors Doing Better Than You?

An overview of CTRs by Platform and Industry

Notice, that the averages are similar across industries: They never reach above 7%. That also means that 93% of people are NOT interested.

Beyond this happening due to the technology not being 100% accurate, it also happens because of banner blindness. After a while, we get used to seeing ads and ignore them more.

To beat the averages and maximize the performance of your campaigns, one popular approach is to experiment with running many smaller campaigns that you optimize individually. 

It is a nightmare if you are not used to it (and often so, it is still a nightmare!). For most of us, it will be a much better use of our time to have a specialist manage that while we focus on what we are good at.

If you choose to keep your campaign management in-house, a valuable framework is to work to get the same CTR as the industry average on the platform you use. And then move on to the next step in your business. Getting awesome outliers takes work, practice, lots of experimentation and time.‍

Where You’ll Get The Highest CTR And Why It Doesn’t Matter (...Until You Compare It With This)‍

I wish I could simply tell you to go to a particular platform and buy a certain ad format to get the best results for you and your business. Fortunately, it is more complex than that. 

Fortunately, because this allows for specialists to find pockets of traffic to exploit for your gain.

As this industry is being built for our very eyes, this is actually how it used to be. We used to have only a few platforms to buy ads online. Now and then a new one would pop up and everyone would flock to it while it was novel and cheap.

However, due to the basic supply and demand principles, the price quickly goes up and the performance goes down as the users get used to the ads.

Now, there are many ad platforms and we advertisers are spread out amongst them although there are a few that are much more popular than others.

If you allow someone to hand-pick a campaign with a good CTR, anyone can make a platform look strong. Simply pick a tiny audience and make the most relevant ad. It doesn’t make sense because there would be no scale and you’d work a lot for the little result but technically the CTR would be great.

A good example of this is Google search campaigns. Among other things, we target the keyword. So if we simply pick a super-specific keyword with low traffic and not many competitors we can perhaps get a 30%-50% CTR. 

Compare that to the average 1% CTR you might get with Facebook ads and it looks like Google search is the winner. But if you are only getting one lead per week with that search campaign while getting seven with the Facebook campaign, who cares about the CTR?

To make things even more complex, we also have to consider the people who know about our brand compared to those that don’t... And even how much they know about us.

The CTR is usually much higher for people who know about the brand and click on the campaign we made specifically for them (retargeting ads).

Compared to those that have never heard about us before (referred to as a cold audience): we can create a more specific campaign because we know more about them (like that they are interested in our brand and perhaps looked at the pricing page on our website).

Is it even useful for us to compare the CTR of the two? Probably not.

Ultimately the best thing we can do is to look at something deeper in the business. Typically, that will be either profit earned from the campaign but sometimes that isn’t possible due to the nature of the business or a lack of technical setup to track it.

Instead, we might look at the cost per sale and how many sales we get between the two campaigns. That’s why we create the campaigns anyway, right? To boost the business.

CTR is good for understanding if that part of our campaign is a bottleneck that we can improve upon. And for that, we could use the industry benchmarks above.

Part 3 - How to Get More Bang for Your Buck - No Matter The Ad Format, Industry or Campaign

The Simple Three-Step Process to Improve Your CTR (Even if You Are Not a Marketer)

To easily create relevancy for your campaign, follow the simple three-step framework below. 

It is designed for you to avoid overwhelm by instead of covering everything and give you the most perfectly optimized campaign, it gives you 80% of the performance with 20% of the work. 

It will help you move the needle and get big wins instead of focusing on minutiae. The 80-20 rule is also known as the Pareto principle and dictates that 80% of our performance comes from 20% of the work.

Let’s dive in!

Step 1: Targeting

The first step is to test targeting to make sure you reach the right people. 

Targeting is one of the core differentiators on each platform. With Google search ads, beyond the basics of demographics targeting (country, device, and age group, etc.), the key is psychographics which is represented as the keywords people search for.

Finding just the right keyword phrases that your buyers search for is the essential first step.

On Facebook ads and Google display (Google’s display banners) that is represented as interests or behaviors.

You’ll want to A/B test different targeting variations against each other to find the targeting that fits your business the best. How to do that is out of the scope of this guide but if you’d like to dive deeper, you can find more info here.

A/B testing (also called split-testing) simply refers to having two variations of an ad compete against each other. Then picking the best-performing one based on the data and the metric that is most important for your goals - typically, that will be the profit earned or sales/leads made.

Pro tip: try experimenting with both broad and narrow interests/keywords. You might find that the narrow targeting performs better but the broader might be cheaper and offer more scale to make it worth your while.

Step 2: Angle and messaging

The second part is tackling the right problem your buyers are looking to solve. This is sometimes referred to as the angle or core message. The point is that your product or service likely solves multiple problems or gives multiple benefits to your customers.

In advertising one of the fundamentals is to talk about one idea at a time as to not confuse people. This step is about understanding which of those benefits performs the best when you attract new leads.

Let’s imagine you own an ecommerce store selling soccer cleats (shoes). There are a few different things that might be important to the buyers:

1. Running fast without sliding
2. Shooting the ball precisely with power and control
3. Affordable price, discounts or free shipping
   

If you’ve been in business for a while, you have probably come across your customers’ pain points or desires now and then. Usually, the more often you hear a certain one, the more important it is and the more bang for your buck you can get by focusing on just that one for your ad.

There is no reason to leave it up to chance when we have the opportunity to have the market tell us what they prefer by A/B testing the different options against each other and keep the winning one.

If you don’t already have these listed out in a document, you might want to get your customer service team to help you create one. They should hear these all the time so it is typically an easy job.

Now, it’s time to create an ad for each of those problems or benefits and compare which one is the most effective and draws in the best cost per action.

Below is an example showing the same ad with two different benefits:

For the creative element, having a tight focus on exactly what is most important to your customers will offer you the biggest difference in performance.

Step 3: The headline

The final step is to play around with the specific message. The difference between discovering the best angle for your ad (step 2) and this step is that you’ve found the best problem to solve for your customers and now you are tweaking that to make it as attractive as possible.

Typically, the headline is what makes the most difference because that’s what people see first so that’s where I like to start. 

Make sure you keep the rest of the ad campaign the same so you can be sure that if you change the headline, that is what is actually making a difference. If you make multiple changes at once you won’t know which one caused the difference.

Notice we are not even touching whether to use emojis and which CTA to use. People often mistake these for importance. 

Sure they can give you an extra boost but with a focus on impact, is that really where you can get the biggest win?

Think about it, would you rather launch a new campaign entirely or test the CTA of a campaign? Which do you think will bring you the biggest results in your business?

Pro tip: using the same headline on the ad and landing page usually performs well because the lead quickly understands that they are on the right page.

Many marketers love to optimize the image/video on display ads. While you might see a bump in CTR, consider that an ad with a somewhat relevant image and a great explanation of how your product solves their problem performs much better than a beautiful image with copy that doesn’t persuade the customer.

You can select different objectives for your campaign depending on what you’d like the users to do. 

With Facebook Ads, you can select that you prefer to target people that are more likely to click your ad - that does not mean they are like to buy - just click. 

Selecting that one will likely give you a higher CTR but it will be a false signal since there is no correlation between that and sales.

The way popular ad platforms understand how relevant your ad campaign is to their users is through an algorithm. On Google part of that algorithm is called a quality score.

The quality score is made up of different metrics to determine which ad gets shown when and to who. One is your budget but it is much less of an important factor that you would think. Another is CTR.

As illustrated above (in this case for Google), when platforms deem our ad more relevant they reward us a better price whether or not we offer to pay more.

While each of the platforms is different and have their quirks, the concept as described above is similar across the board. 

The point is not that they are different but rather that these are pointers as to how it works. So when you hear a specialist talking about improving CTR you now understand why they might do it.

How Being a ‘Non-Marketer’ May Be Your Biggest Advantage

Contrary to what you might imagine, the fact that you are not a specialist might be your biggest advantage. 

You see, behind closed doors I regularly hear CEOs and senior execs complain that their marketers have tunnel vision.

They are too focused on a specific metric or that a certain campaign does well. Although marketers are smart and many specialists know better than to focus only on the CTR it can be a representation of a too narrow-minded focus.

It is often easier for non-marketers to have a better perspective on these things because they are not in the marketing-trenches all day. They know other parts of the business well and are therefore more likely to have the perspective to consider the ad campaign within the perspective of the whole business.

Marketing used to be creative magic, and it still is to some extent. However, online, it is much more about math-men than Mad Men.

Getting the help of a friendly agency that values your business is likely to be a much better use of your time than learning to compete with these guys yourself. That way you can focus on the things that matter the most in your company.

Alternatively, if you would like to master digital marketing and earn a profit from your clients, have a look at our Agency Overdrive-program. 

It is an on-demand video training library built for freelancers and digital agency owners with more than 180,000 students! It includes things like client billing templates, marketing ROI analysis templates and ready-made proposal templates.

Click here to read more.