April 29, 2011
I'm often asked about conversion rates and "What is a good Click Through Rate (CTR) on Pay per Click advertising campaigns (PPC) campaigns?"
It sounds a simple question but is actually a bit more complicated and, surprisingly, the answer may not actually matter.
Firstly it depends if you mean Click Through Rate (CTR) or actual conversion in to customers. If the latter it will depend on your offer and a whole host of onsite factors such as your "shopping cart" process. This might be a simple click to download a document or a complex shopping cart process that can lose people when too complex – research shows that on many sites over 80% of people ditch the cart before paying . No supermarket will put up with that but the most surprising thing is many website owners don't even know this is happening. It isn't too difficult to collect stats on your sales funnel so if you are serious about sales you should do this via tools like Google Analytics.
If the question really means "What is a good CTR on a PPC campaign?" it again depends on many factors such as product, geography, demographics, whether you use search or display channels, whether the ad is seen on a PC, laptop, iPad or mobile phone, whether you use ad extensions or remarketing techniques and literally hundreds of other factors.
In terms of CTR some countries have an account average as low as 0.8% at account level - the people that are below this are the ones that complain that PPC doesn't work! I've even seen figures as low as 0.0005% for individual accounts.
However, again the question raises interesting questions about the CTR of what. Accounts with poor overall figures might have individual campaigns within them with much better figures – most campaigns I work with are between 2-8%, with some much higher. CTR at keyword level is another aspect of this question. 100% CTR is not uncommon for some keywords – especially long tail keywords.
CTR rates between search and display will also give dramatically different results with display normally being much lower than search.
Then you have to also consider the question of what type of PPC platform you are using. PPC on Facebook will often start high but has a tendency to fade away quite quickly – this isn't a problem if you understand why and act accordingly. Platforms like Google Adwords are different again. Not only are the "rules" different but so are the results.
My next question is "Does it matter what CTR I get?"
The answer surprisingly is no. Although good CTR will make campaigns more cost effective the real measure is which campaign makes money for you. Sometimes a poor CTR can make more profits than a high CTR .. but you will never know this if you optimise for CTR, you need to optimise your campaigns and adgroups for sales.
CTR is not the factor you need to consider long term .. it is which one converts into the most profitable sales.