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Why We Should Stop Focusing on Click Through Rates


The world keeps evolving and so does the way ROI is defined and derived by any organization. Advent of technology has enhanced the way we speak with our customers and how we consume the rich data they have left us when they casually crawl through our website or any other medium for that matter using the internet. Thanks to the same technology, the ever changing needs of the consumers has pushed the advertisers and business owners to adopt to all new levels of metrics and parameters to give them a clarity on how their online advertising will yield results.

We have a large number of metrics which provides insights on the marketing campaigns results. One of them being CTR - Click Through Rate, which used to play a very pivotal role, when it comes to assessing the health of a PPC campaign. It used to - thanks again to the dynamic nature of consumer behavior and the evolution of the way metrics are being looked at. This blog is an attempt to explain why CTR is moribund but not dead. The Focus has now shifted to a metric which is more or less the aggregate measure of the ROI itself. The CLICK. 

In this Blog post, we'll delve deep into the realms of the metrics' used in PPC campaigns, and understand their impacts of focusing only on CTR. As of today, CTR is looked at as one of the primary parameters in measuring the effectiveness of a PPC campaign. It was religiously believed, that more the CTR, the better the campaign's performance will be. This may not necessarily be true, while it may be important for organizations to know the CTR, but this does not necessarily make the PPC campaign effective. Higher the CTR doesn't always promise higher ROI. Let's understand why.

Understanding Click through Rate: 

Click Through Rate or CTR is defined as "the number of clicks received by an ad divided by the number of times the ad is shown (impressions), expressed in percentage" 

CTR happens to be the most useful of all the metric's since recently. Historically, CTR has always been that fancy metric which captivated the fascination of the digital marketers and their clients, as it showed the overall effectiveness of their ad - the number of times the ad was clicked out of all the times it was displayed.  

So why CTR is important? 

It directly or indirectly tells us how relevant the adcopy - that is written to the keyword - has triggered the same ad. Because the basic understanding is that if the ad is not relevant to the Keyword that triggered, then there wouldn't be any click. 
Isn't it enough?

No, it is not enough. Focusing only on CTR will not help anyone to increase the actual ROI for the advertiser. At the end of the day, CTR will only give us smart cues on how relevant a campaign is but doesn't help in understanding the relevance between the actual ROI and the campaign's supposed performance.

Really!!! So Why Not CTR - What happens during optimization? 

As we all know, CTR is calculated as the result of division of clicks and its impressions. On a practical note let's understand how that can be tricky.
Let's assume that we are running 3 search campaign and below are the vitals of that campaign at different time periods.

Gopinath 1.PNG

Looking at the above scenarios, one would assume that the one having the highest CTR has delivered the highest ROI to the advertiser. But that's not the actual case. When we have 10000 impressions and just 1 click, the CTR is 0.01%. Though the CTR is too low we are allowing the ad to get more and more exposure and increasing the probability of getting the second clicks higher. But when the CTR was 1%, the impressions we had were just 100, i.e. we had restricted the way the ad was showing up by reducing its exposure. Hence, when you optimize a campaign for CTR, there's a very high risk of restricting it from gaining maximum exposure - resulting in missing all those probable clicks that could have got converted. 

By definition, more the IMPRESSIONS - lesser the CTR and vice versa. So when somebody is trying to optimize a campaign based on the KPI/Parameter CTR, it is highly possible that while trying to increase the CTR, the person who is running the campaign might end up reducing the overall impression share of the campaign. Which is just not good! 

This is because, the basic steps that are done, to increase CTR , like changing the match type from phrase to exact etc. will effectively increase the CTR but greatly reduce the impression share.  

Reduction in the impression share will definitely increase the CTR figure to exponentially heights, but when the Impression share decreases, the exposure the ad is supposed to get decreases resulting in less clicks i.e. less ROI.

Thus we'll end up concentrating on a parameter which does not help us delight our customers. So we should not put CTR in the forefront and start optimizing a campaign. It is ok to look at CTR to understand the relevancy of the keywords and the ads, but making it the reins of the campaign will result in lesser ROI. Instead we should look at increasing the number of clicks,on a monthly basis. We could use the CTR to keep us relevant but the primary focus should be on Clicks.

So What's Next?
With CTR getting less effective than what it used to be in a PPC campaign, it has pushed the marketing companies and the advertisers to evolve and look for something that will help them serve their ever changing needs of their customers' and their ROI  - The CLICK. 

The Click denotes the end result an advertiser is looking for from a marketing point of you. And in a PPC campaign as the name suggests we pay the search engines per each click and it becomes an inevitable parameter to be tracked keeping the CTR as its balancing wheel. 

Case Study:
In one of our current engagement where we do end to end campaign management for one of Australia's largest online marketer, the primary KPI was to reach a CTR of 3%. The engagement struggled to achieve the KPI in the beginning months but went on to achieve and surpass the set target comfortably. The trend that was noticed was that, when the optimization was done towards increasing the CTR, the impression share reduced considerably and the clicks started reducing. The KPI had a financial implication which restricted the campaign managers from experimenting or to implement industry best practices.

Once the trend was noticed, it was explained to the client that CTR as a KPI is not helping the end users. By concentrating on CTR, the number of clicks that is received for that campaign has reduced considerably and it posed an imminent danger of the end customer threatening to cancel his marketing campaign because of Low ROI. The clients agreed and CTR was completely removed as a KPI and the engagement concentrated on clicks thereafter. 

As the world keeps evolving, let's evolve the way we define and derive the ROI to our clients. Focusing on the right PARAMETER will help us in delighting our customers. Even if we need to educate the customers on what is the right KPI/Parameter, we should. CTR helps, but it's time for us to move  on to something more relevant to the actual ROI  - The Clicks. 


I always felt something wrong in CTR and didnt aggree with higher CTR results better campaign's performance.
Thanks this post clearifies whats wrong in detail and sure this will help defining KPI better

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