February 18th, 2009 Add Your Comments Bookmark and Share

Everybody knows what click-through-rates (CTR) are and how important they are to making money online? Right? You’d be surprised just how many people see CTR banded around but don’t really understand what it means. With this in mind I thought I’d lay it down in as plain an English as I can muster for all those newbie’s out there.

What Is A Click Through Rate?

Your CTR (Click-Through-Rate) is the number of times that a link is followed(clicked) for ever 100 impressions. It is one of the key basic metrics in making money online. If a link appears on your page for 50 impressions and gets clicked once then you have a click through rate of 2%. If you have a link that appears on 5,000 impressions and gets 500 clicks then you have a click through rate (CTR) of 10%. Click through rate applies equally to any sort of link, be it text or image. Measuring your CTR is one of the best ways of gauging how ANY ADVERTS YOU HAVE PAID FOR are performing and also how any ADVERTS YOU’RE SHOWING are performing.

Where Is CTR Important?

CTR counts most in 3 areas of making money online. The first of these is with Google Adwords*. Adwords is Google’s advertising network that allows advertisers to bid on search phrases and show adverts either through their search results or on publisher’s websites. CTR is very important with Adwords because the higher the CTR you can achieve with your adverts the lower you can make your bid price! Having a high CTR can save you a lot of money in the cost of each click. As a general rule any advert/phrase on Adwords that is getting below a 1% CTR is considered bad. 2%-5% is considered in the normal range and anything above that I think most advertisers would consider being good.

Secondly CTR is very important to anybody showing pay-per-click advertisements such as Google Adsense. With pay-per-click (PPC) you are only paid when somebody clicks on an advert so it is absolutely in your best interest to experiment with how any adverts are displayed to get the best possible CTR. With Adsense the higher the CTR the better, it’s hard to give a general rule as it is very dependent on what type of traffic your website attracts but personally I worry if any of my pages are returning a less than 2% CTR with Adsense. Some Micro Niches often generate Adsense click through rates in excess of 20%! It’s not just Adsense that provides pay-per-click advertising. A large number of other ad networks will allow you to show adverts on a PPC basis and for all of these the CTR is one of the most important stats to monitor.

The final place where I think that CTR is very important is with affiliate marketing landing pages. Back in the good old days you used to be able to pay for an advert on Adwords and direct the traffic straight to an advertiser where they either bought or they didn’t. This gave you another metric – conversion rate, which I’ll go into another day. However, now this type of action is discouraged. Most affiliate marketers instead put the traffic onto a page of their own, called a landing page. The job of the landing page is to get as many people as possible to click through to the offer and sign up. In having this “in-between” page between the advert and the final sign-up page the CTR now becomes important. All ways of making money online are about percentages. In order to convert as many visitors as possible you need your landing page to have as good a CTR to the offer page as possible. I’m not a big fan of paid traffic so my own experiences with what CTR is normal in these circumstances could be way off but for me I like to see at least a 50% CTR from my landing pages to the offer.

So there you have it, a brief summary of what click-through-rates mean and a few examples of what is “normal”. If you’ve got any comments or think I’ve missed anything please leave a comment?

*Almost forgot, I only included Adwords in this because as far as I know they’re the only ad network that actively factors the CTR into the bid/position calculation. If anybody knows any different please feel free to leave a comment 🙂