Click-through rate

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Click-through rate (CTR) is the ratio of clicks on a specific link to the number of times a page, email, or advertisement is shown. It is commonly used to measure the success of an online advertising campaign for a particular website, as well as the effectiveness of email campaigns. [1] [2]

Contents

Click-through rates for ad campaigns vary tremendously. The first online display ad, shown for AT&T on the website HotWired in 1994, had a 44% click-through rate. [3] With time, the overall rate of user's clicks on webpage banner ads has decreased.

Purpose

The purpose of click-through rates is to measure the ratio of clicks to impressions of an online ad or email marketing campaign. Generally, the higher the CTR, the more effective the marketing campaign has been at bringing people to a website. Most commercial websites are designed to elicit some sort of action, whether it be to buy a book, read a news article, watch a music video, or search for a flight. People rarely visit websites with the intention of viewing advertisements, in the same way that few people watch television to view the commercials. [4]

While marketers want to know the reaction of the web visitor, with current technology it is nearly impossible to quantify the emotional reaction to the site and the effect of that site on the firm's brand. In contrast, it is easy to determine the click-through rate, which measures the proportion of visitors who clicked on an advertisement that redirected them to another page. Forms of interaction with advertisements other than clicking are possible but rare; "click-through rate" is the most commonly used term to describe the efficacy of an advert. [4]

Construction

The click-through rate of an advertisement is the number of times a click is made on the ad, divided by the number of times the ad is "served", that is, shown (also called impressions), expressed as a percentage:

Online advertising

Click-through rates for banner ads have decreased over time. [5] When banner ads first started to appear, it was not uncommon to have rates above five percent. They have fallen since then, currently averaging closer to 0.2 or 0.3 percent. [6] In most cases, a 2% click-through rate would be considered very successful, though the exact number is hotly debated and would vary depending on the situation. The average click-through rate of 3% in the 1990s declined to 2.4%–0.4% by 2002. [7] Since advertisers typically pay more for a high click-through rate, getting many click-throughs with few purchases is undesirable to advertisers. [6] Similarly, by selecting an appropriate advertising site with high affinity (e.g., a movie magazine for a movie advertisement), the same banner can achieve a substantially higher CTR. Though personalized ads, unusual formats, and more obtrusive ads typically result in higher click-through rates than standard banner ads, overly intrusive ads are often avoided by viewers. [7] [8]

Modern online advertising has moved beyond just using banner ads. Popular search engines allow advertisers to display ads in with the search results triggered by a search user. These ads are usually in text format and may include additional links and information like phone numbers, addresses, and specific product pages. [9] This additional information moves away from the poor user experience that can be created from intrusive banner ads and provides useful information to the search user, resulting in higher click-through rates for this format of pay-per-click Advertising. Since CTR is an expression of relevancy of the ads to the user search, higher click-through rates are generally rewarded with a better quality score attributed to the ads, which in turns might lead to lower CPC, therefore incentivising advertisers to continually improve the relevancy of their ads. However, having a high click-through rate isn't the only goal for an online advertiser, who may develop campaigns to raise awareness for the overall gain of valuable traffic, sacrificing some click-through rate for that purpose.

Estimating the Click-Through Rate for Ads

Search engine advertising has become a significant element of the Web browsing experience. Choosing the right ads for the query and the order in which they are displayed greatly affects the probability that a user will see and click on each ad. This ranking has a strong impact on the revenue the search engine receives from the ads. Further, showing the user an ad that they prefer to click on improves user satisfaction. For these reasons, there is an increasing interest in accurately estimating the click-through rate of ads in a recommender system. [ citation needed ]

Email

An email click-through rate is defined as the number of recipients who click one or more links in an email and landed on the sender's website, blog, or other desired destination. More simply, email click-through rates represent the number of clicks that your email generated. [10] [11]

Email click-through rate is expressed as a percentage, and calculated by dividing the number of click-throughs by the number of tracked message deliveries. [12]

Most email marketers use this metrics, along with open rate, bounce rate and other metrics, to understand the effectiveness and success of their email campaign. [13] In general there is no ideal click-through rate. This metric can vary based on the type of email sent, how frequently emails are sent, how the list of recipients is segmented, how relevant the content of the email is to the audience, and many other factors. [14] Even time of day can affect click-through rate. Sunday appears to generate considerably higher click-through rates on average when compared to the rest of the week. [15]

Every year, various types of research studies are conducted to track the overall effectiveness of click-through rates in email marketing. [16] [17]

Click-Through Rate and Search Engine Optimization

Some experts on search engine optimization (SEO) have claimed since the mid-2010s that click-through rate has an impact on organic rankings. [18] Numerous case studies have been published to support this theory. Proponents supporting this theory often claim that click-through rate is a ranking signal for Google's RankBrain algorithm.

Opponents of this theory claim that the click-through rate has little or no impact on organic rankings. Bartosz Góralewicz published the results of an experiment on Search Engine Land where he claims, "Despite popular belief, click-through rate is not a ranking factor. Even massive organic traffic won’t affect your website’s organic positions." [19] More recently, Barry Schwartz wrote on Search Engine Land, "...Google has said countless times, in writing, at conferences, that CTR is not used in their ranking algorithm." [20]

See also

Related Research Articles

Cost per impression (CPI) and cost per thousand impressions (CPM) are terms used in traditional advertising media selection, as well as online advertising and marketing related to web traffic. They refer to the cost of traditional advertising or internet marketing or email advertising campaigns, where advertisers pay each time an ad is displayed. CPI is the cost or expense incurred for each potential customer who views the advertisement(s), while CPM refers to the cost or expense incurred for every thousand potential customers who view the advertisement(s). CPM is an initialism for cost per mille, with mille being Latin for thousand.

Click fraud is a type of fraud that occurs on the Internet in pay per click (PPC) online advertising. In this type of advertising, the owners of websites that post the ads are paid based on how many site visitors click on the ads. Fraud occurs when a person, automated script, computer program or an auto clicker imitates a legitimate user of a web browser, clicking on such an ad without having an actual interest in the target of the ad's link in order to increase revenue. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud.

Pay-per-click (PPC) is an internet advertising model used to drive traffic to websites, in which an advertiser pays a publisher when the ad is clicked.

<span class="mw-page-title-main">Banner blindness</span> Tendency to ignore banner-size notices

Banner blindness is a phenomenon in web usability where visitors to a website consciously or unconsciously ignore banner-like information. A broader term covering all forms of advertising is ad blindness, and the mass of banners that people ignore is called banner noise.

Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising that uses the Internet to promote products and services to audiences and platform users. Online advertising includes email marketing, search engine marketing (SEM), social media marketing, many types of display advertising, and mobile advertising. Advertisements are increasingly being delivered via automated software systems operating across multiple websites, media services and platforms, known as programmatic advertising.

Cost per mille (CPM), also called cost per thousand (CPT), is a commonly-used measurement in advertising. It is the cost an advertiser pays for one thousand views or impressions of an advertisement. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of exposing the ad to one thousand viewers or listeners. It is used in marketing as a benchmarking metric to calculate the relative cost of an advertising campaign or an ad message in a given medium.

Search engine marketing (SEM) is a form of Internet marketing that involves the promotion of websites by increasing their visibility in search engine results pages (SERPs) primarily through paid advertising. SEM may incorporate search engine optimization (SEO), which adjusts or rewrites website content and site architecture to achieve a higher ranking in search engine results pages to enhance pay per click (PPC) listings and increase the Call to action (CTA) on the website.

<span class="mw-page-title-main">Microsoft Advertising</span> Online advertising service

Microsoft Advertising is an online advertising platform developed by Microsoft, where advertisers bid to display brief ads, service offers, product listings and videos to web users. Provides pay per click advertising on search engines Bing, Yahoo! and DuckDuckGo, as well as on other websites, mobile apps, and videos.

<span class="mw-page-title-main">Advertising media selection</span>

Advertising media selection is the process of choosing the most efficient media for an advertising campaign. To evaluate media efficiency, planners consider a range of factors including: the required coverage and number of exposures in a target audience; the relative cost of the media advertising and the media environment. Media planning may also involve buying media space. Media planners require an intricate understanding of the strengths and weaknesses of each of the main media options. The media industry is dynamic - new advertising media options are constantly emerging. Digital and social media are changing the way that consumers use media and are also influencing how consumers acquire product information.

In Internet marketing, search advertising is a method of placing online advertisements on web pages that show results from search engine queries. Through the same search-engine advertising services, ads can also be placed on Web pages with other published content.

Website monetization is the process of converting existing traffic being sent to a particular website into revenue. The most popular ways of monetizing a website are by implementing pay per click (PPC) and cost per impression (CPI/CPM) advertising. Various ad networks facilitate a webmaster in placing advertisements on pages of the website to benefit from the traffic the site is experiencing.

<span class="mw-page-title-main">Targeted advertising</span> Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting.

Social network advertising, also known as social media targeting, is a group of terms used to describe forms of online advertising and digital marketing that focus on social networking services. A significant aspect of this type of advertising is that advertisers can take advantage of users' demographic information, psychographics, and other data points to target their ads.

Behavioral retargeting is a form of online targeted advertising by which online advertising is targeted to consumers based on their previous internet behaviour. Retargeting tags online users by including a pixel within the target webpage or email, which sets a cookie in the user's browser. Once the cookie is set, the advertiser is able to show ads to that user elsewhere on the internet via an ad exchange.

Performance Marketing, also known as pay for performance advertising, is a form of advertising in which the purchaser pays only when there are measurable results. Its objective is to drive a specific action, and advertisers only pay when that action, such as an acquisition or sale, is completed.

Quality Score is a metric used by Google, Yahoo!, Facebook and Bing that influences the ad rank and cost per click (CPC) of ads.

A view-through rate (VTR), measures the number of post-impression response or viewthrough from display media impressions viewed during and following an online advertising campaign. Such post-exposure behavior can be expressed in site visits, on-site events, conversions occurring at one or more Web sites or potentially offline:

Ad text optimization (ATO) is the process of improving the performance of a text Pay Per Click (PPC) Advertisement on search engines by improving its Click Through Rate (CTR) performance both in terms of volume and quality of response, that is “more buyers, less browsers”. ATO is an element of Search engine optimization, where the subject is discussed in greater detail.

Cost per order, also called cost per purchase, is the cost of internet advertising divided by the number of orders. Cost per order, along with cost per impression and cost per click, is the starting point for assessing the effectiveness of a company's internet advertising and can be used for comparison across advertising media and vehicles and as an indicator of the profitability of a firm's internet marketing.

Lead validation is the process by which sales leads generated by internet marketing campaigns are separated from other types of conversions. Lead validation is crucial for effective internet marketing management; without it, companies can neither accurately evaluate the results of, nor efficiently improve, their SEO, PPC, display advertising, email, content marketing and social media campaigns.

References

  1. ↑ American Marketing Association Dictionary. "Dictionary". Archived from the original on 2012-11-21. Retrieved 2012-11-29.. Retrieved 2012-11-02. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language in Marketing Project.
  2. ↑ Lorente-Páramo, Ángel J.; Chaparro-Peláez, Julián; Hernández-García, Ángel (2020). "How to improve e-mail click-through rates – A national culture approach". Technological Forecasting and Social Change. 161: 120283. doi:10.1016/j.techfore.2020.120283. S2CID   224908552.
  3. ↑ Wasserman, Todd (9 August 2013). "This Is the World's First Banner Ad". Mashable. Mashable. Retrieved 11 September 2015.
  4. 1 2 Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN   0-13-705829-2. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language in Marketing Project.
  5. ↑ Shimp, Terence A. (2008). Advertising Promotion and Other Aspects of Integrated Marketing Communications. Cengage Learning. p. 415. ISBN   978-0324593600 . Retrieved 18 September 2016.
  6. 1 2 Stern, Andrew (February 1, 2010). "8 ways to improve your click-through rate". iMedia Connection. Archived from the original on February 4, 2010. Retrieved February 7, 2010.
  7. 1 2 Li, Hairong (2004). "Internet Advertising Formats and Effectiveness". Semantic Scholar. Retrieved 2024-07-31.
  8. ↑ USapplication 20,090,157,495
  9. ↑ "Email Campaign Performance Metrics Definitions". Archived from the original on December 19, 2012. Retrieved December 18, 2012.
  10. ↑ Kevin Gao. "Click Through Rates: Click Through Rates Numbers and Their Meaning". Archived from the original on December 18, 2012. Retrieved December 18, 2012.
  11. ↑ John Arnold (April 2011). "Calculating the Click-through Rate for Your E-Mail Marketing Campaign from E-Mail Marketing for Dummies, 2nd Ed".
  12. ↑ "Email marketing metrics: Click through rate (CTR) relevant to email marketing measurement". January 17, 2010. Archived from the original on 5 May 2011.
  13. ↑ "Average Email Click-Through Rate". Archived from the original on 31 December 2012. Retrieved December 20, 2012.
  14. ↑ Pete Prestipino (July 21, 2011). "EMail Marketing Metrics 2011".
  15. ↑ Matt McGee (July 23, 2012). "E-mail Open Rates Declining, Click-Through Rates Rising [Study]".
  16. ↑ David Moth (July 24, 2012). "Email marketing stats: consumers open just 20% of messages".
  17. ↑ "Click-Through Rate (CTR): Is It a Google Ranking Factor?". Search Engine Journal. October 17, 2021. Retrieved 2022-12-07.
  18. ↑ "Is CTR A Ranking Factor In Organic Results?", Bartosz Góralewicz,12 Aug 2015
  19. ↑ "Google doc rekindles myth that click-through rate affects rankings", 21 Feb 2019

Further reading

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