DOES A HIGH CTR REALLY DETERMINE A CAMPAIGN'S SUCCESS?

Most digital marketers strive to have a high CTR as it is one of the most commonly used indicator that shows how successful a campaign is. After all, an Ad with a high CTR shows how effective a marketing campaign has been in bringing people to the website and, also, in the ability to lead to high conversions. But is this really the case? 

By definition, CTR or Click-through Rate is 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 5 clicks, 

- Number of clicks would be 5 while

- CTR would be 5% (which is not bad for a stat)

Over time, I have come to understand that an Ad with a higher CTR does not necessarily fare better than another Ad with a lower CTR based on the following reasons:

SCENARIO 1: HIGHER CLICKS, LOWER CTR

Let us assume that the total number of click-through equals total conversions.

And we have for campaign A: 5 clicks from 100 impressions (CTR = 5%). For campaign B: 100 clicks from 4000 impressions (CTR = 2.5%)

At face value, campaign A will likely be chosen over B because it has a higher CTR and more efforts should therefore be channeled to that same channel. But what if both channels have reached their peaks, that is, this is about the maximum number of impressions or clicks that can be gotten for any given period, would it not be wiser to go for campaign B - Higher clicks but lower CTR since it would likely lead to more conversions?

SCENARIO 2: LOWER CTR, LOWER COST PER AD

It is worth spending on an Ad with higher CTR and higher conversions even if the cost per Ad is high. But what about if the conversions are not that fantastic. Would it be in the company's interest to still continue such expenses? Better still, efforts could be shifted to Ads that have lower CTR and lower cost per Ad provided such Ads can generate so many clicks to the website. There is likely to be a greater chance of conversions from the number of clicks being generated.

SCENARIO 3: CPC Vs CPM

If CTR is to really count, it is with a CPM (cost per impression) pricing model. This is because with CPM, even if nobody clicks on your Ad, you still get to pay for the number of impressions your Ad was served. So a high CTR would mean that you are getting your money's worth from the Ad. But in the case of CPC (cost per click), this scenario does not necessarily apply. I have, on so many occasions, seen where Ads with lower CTRs generate more clicks that drive conversions than Ads with higher CTRs.

SCENARIO 4: DISPLAY VS SEARCH ADS

Display Ads generally have a lower CTR as compared to search Ads mainly because display Ads show more often even if the user is not searching for such an Ad in the first place. So having a CTR of less than 1% does not mean your Ad is not successful. It all depends on campaign type. If it is a display Ad you are safe (provided you are generating enough clicks and conversions) while for a search Ad it could give you a cause for concern. 

SCENARIO 5: GOAL OF THE COMPANY

Assuming a company wants to sell 100 computers and they place Ads on 2 different channels. Also assume that everyone that clicks on the Ad finally buys the computer and both have equal cost per Ad. Now, Channel A has a CTR of 10% out of 300 impressions (that is, 30 people clicked and then bought the item) while channel B has 4% out of 2,000 impressions (that is, 80 people clicked and then bought the item). We can now see that even though channel A has a higher CTR, channel B is actually closer to meeting the goal of selling 100 computers. This is a scenario I see virtually everyday and I am sure you have too.

Having a high CTR for any campaign is not such a bad thing but there is need to relate it with your marketing needs and overall goal of the company. Only then will you know how successful your campaign is.