Google AdWords Management: Understanding Click-Through Rate

Google AdWords Management: Understanding Click-Through Rate

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Whether you’re new to Google AdWords Management or you’ve been handling your account for a while, you will have come across the click-through rate measurement at some stage. So what is click-through rate, and what does it mean for your account? Click Thru Rate or CTR, as it is more commonly referred to, is calculated by dividing the total number of impressions by the total number of clicks. You can review CTR at several levels of your account. You can review the CTR of the whole account and this is done for you on the “Home” screen of your Google AdWords account. You can review the CTR all the way down to a single keyword or individual ad. While having a high CTR is great, it’s not necessarily in your best interests to have a high CTR across your whole account, especially if your account has multiple goals.

For example you might have an online store that sells white goods. You have a large range of white goods; fridges, washing machines, clothes dryers and more, and on top of that you have a broad range of brands. You’re AdWords Manager set up your AdWords account with multiple campaigns so you have one each for fridges, washing machines and dryers as well as the rest of your product line. Within each of your product campaigns you’ve created Ad Groups for different marketing strategies and different goals. For the purposes of this example let’s assume that your campaigns are all search network only, you have an Ad Group for each different brand you sell, you have Ad Groups for different keyword combinations in different stages of the buying funnel and you have Ad Groups with keyword combinations representing the different locations people might be searching for your products within.

Depending on your goals and the purposes of the individual Ad Groups, the level of CTR will vary. For Ad Groups you have that are targeting brands or people in the shopping phase of the buying funnel, you will want to have a CTR as high as you can get. These keywords have a very high chance of converting into sales for your business, so you want to ensure you are getting as many clicks as possible from these ads. These Ad Groups might not attract search volumes as high as other Ad Groups you are running that are broader but they are where you will get fast and consistent return on investment. A general rule of thumb is that 20% of search traffic will click on an ad when using Google; the other 80% will either search again or click an organic link. All your ad groups that are likely to produce high volumes of conversions should have CTR of between at least 5% and 20%, in some cases you can get higher CTR. Think about it like this, if you have a series of Ad Groups that have a 2% CTR and a 10% conversion rate and you are making $500 every week from these in profits, then you alter your ad text and improve your average position to obtain a better CTR of say 8%. Your Ad Group still converts 10% of traffic, it’s still the same traffic, you are just getting more of it. All of a sudden you are now earning $2000 every week from these Ad Groups. Monitoring your CTR and understanding how much of an impact it can have to your overall return on investment is important when running online marketing strategies via Google AdWords Management.

There are two ways you might increase your CTR for the above example. You might be running an ad group for Fisher & Paykel Fridges, You’ve noticed you have a CTR of 2%, and after reviewing your search traffic for the last 30 days you see that the average position of your ad is 5.2 for that period of time. The lower your average position, the lower you should expect your CTR to be, of course you can write compelling ad text to engage your audience however you still want to make sure your ad is visible so that ad text can be seen. There is no use having an excellent ad being displayed down the right hand side of the page if 95% of users aren’t seeing it. There are two strong ways to increase your ad position, you can increase your Maximum Cost per Click bid. Bidding higher in the ad auction can push your ad rank and average position up. At some point you will need to factor in higher bids to get higher positions. Alternatively you can explore other ways to improve your ad rank which will allow you to get higher up the page without necessarily having to pay much more then you already do.

There are also scenarios where a low CTR is something that can be less important, and this is where you would allow for the overall account to have a lower CTR then high converting Ad Groups. For example, you might have noticed that a lot of people search for repair services for their white goods, say a fridge in this case. Most of the search traffic looking for repairs does end up getting someone to come and repair their broken fridge however there is also a percentage that finds the cost of repairs not significantly lower than buying a new fridge and so they decide to buy a new fridge. Before this traffic then starts to look for someone to sell them the fridge of their dreams, there is a small window of opportunity to present yourself to them as a place to buy before having to compete with your regular competition. So you create an ad group targeting keywords related to fridge repairs and you write your ad text to encourage search traffic not to waste money on repairs for a short term solution and to instead invest the extra money in a brand new fridge. After a period of time the ad groups show to have a CTR of 0.5% but a conversion rate of 5%. If the average position of the ad is in the top 3 or 4 and still produces these results it’s not necessarily something you can improve all that much. In fact the main thing you want to focus on with an ad group like this is filtering out irrelevant clicks as much as possible, making sure that your bounce rate is low which would indicate that you’re not accidently paying for clicks for people that think you do repairs. A headline on the ad text saying something like “Wasting Money on Repairs?” would be a good starting point to avoid accruing clicks that think you provide repairs when you don’t.

There are many scenarios like the ones discussed where a high or low CTR will be observed, so remember when looking at your account to focus on the individual strategies themselves rather then the account summary of performance. You might spend hours improving a CTR on a branding style advertising strategy which ends up improving your overall CTR but increasing your total cost and significantly lowering your return on investment, the main thing that should matter to you when advertising is your return on investment.

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