Click-through rate (CTR) is the number of users that click on a specific link out of the total users that view a page, email, or advertisement. 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.
Click-through rates for ad campaigns vary tremendously. The very first online display ad shown for AT&T on the website HotWired in 1994, had a 44% Click-through rate.
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 generally don't visit a website with the intention of viewing advertisements, just as people rarely watch TV with the purpose of consuming commercials.
Marketers want to know the reaction of the web visitor. Under current technology, it is nearly impossible to fully quantify the emotional reaction to the site and the effect of that site on the firm's brand. One piece of information that is easy to acquire, however, is the click-through rate. The click-through rate measures the proportion of visitors who initiated action with respect to an advertisement that redirected them to another page where they might purchase an item or learn more about a product or service. Here we have used "click through rate" on the advertisement (or link) because this is the generally used term, although other interactions are possible.
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Construction
The click-through rate is the number of times a click is made on the advertisement divided by the total impressions (the number of times an advertisement was served):
Click-through rate = Click-throughs (#) / Impressions (#)
Online advertising CTR
The click-through rate of an advertisement is defined as the number of clicks on an ad divided by the number of times the ad is shown (impressions), expressed as a percentage. For example, if a banner ad is delivered 100 times (100 impressions) and receives one click, then the click-through rate for the advertisement would be 1%.
Click-through rates for banner ads have fallen over time. 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. 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. Since advertisers typically pay more for a high click-through rate, getting many click-throughs with few purchases is undesirable to advertisers. 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.
Modern online advertising has moved beyond just using banner ads. Popular search engines like Google and Bing 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. 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. Having high click-through rate isn't the only goal for an online advertiser who will occasionally develop campaigns to raise awareness and sacrifice click-through rate for the overall gain of valuable traffic.
Email CTR
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.
Email click-through rate is expressed as a percentage, and calculated by dividing the number of click throughs by the number of tracked messages delivered.
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. 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. 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.
Every year studies and various types of research are conducted to track the overall effectiveness of click-through rates in email marketing.
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