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Understanding Click Through Rate (CTR)

The first step to understanding Clickthrough Rate is to define it. What is CTR? Clickthrough Rate, commonly abbreviated as CTR is the percentage of Impressions that produce Clicks.

Here is the official Google Ads definition of Clickthrough Rate.

Clickthrough Rate is used to measure how productive your pay per click efforts are at producing Clicks. CTR quantifies the relationship between Impressions and Clicks.

For the math inclined, the formula for calculating CTR is:

 Clicks / Impressions

Here is a very simple Clickthrough Rate example to illustrate:

An Ad has 10,000 Impressions and 3,000 Clicks. 3,000 / 10,000 = ~33%. This Ad has a ~33% CTR. In other words, for about every 3 Impressions, there was a click.

The above is the simple, straightforward explanation of what is Clickthrough Rate. But there is more to understanding Clickthrough Rate as we continue to look further. 

The thing to know when understanding Clickthrough Rate is that CTR reports at different levels within a particular PPC platform. 

For example with Google Ads, CTR is reports at the Account, Campaign, Ad Group, Keyword, Ad levels and more!  Giving you different views of CTR as a whole and from individual elements.

Account level CTR is an aggregate of all of the components within an Account. This measures the overall CTR for your Account. Top level view. Campaign level CTR consists of the components of the individual campaign. Keyword CTR is specific to a particular iteration of a keyword. 

Keyword, Ad and Campaign level CTR are the metrics that get the most focus.

Within this group Keyword and Ad Clickthrough Rate are the building blocks for Ad Group, Campaign and Account level CTR.

Ad level CTR is of particular importance. Ad level CTR is the aggregate CTR of your active keywords and other targeting settings for a particular message

As I have talked about in previous articles, for a person to Click an Ad means someone must first see the Ad. Finally, the Ad needs to connect with a person and move them to action. 

Understanding Clickthrough Rate

Ad level Clickthrough Rate measures how well your targeting and message are working together to produce a Click.

Ad level CTR is the measurement of relevance, intent and message coming together to garner an action.

Now that we have an understanding of Clickthrough Rate, let’s take a look at one of the most common questions PPC advertisers have. What is a good CTR?

Understanding the Relationship Between Impressions and Clicks

Let’s start to dig a little bit deeper into PPC concepts by examining the relationship between Impressions and Clicks. Gain a fuller understanding of how these two building block PPC metrics interact.

In previous posts we took a look at “What is an Impression” and “What is a Click“. If you have not read and understood those concepts, go back and take a look before continuing on here.

Let’s get into understanding the relationship between Impressions and Clicks.

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Should I Manage PPC Campaigns Myself or Hire a Professional?

Should I Manage PPC Campaigns Myself or Hire a Professional?

The age old question that PPC advertisers will almost universally ask themselves at one time or another is should I manage my PPC campaigns myself or hire a professional?

Assuming your business is a good fit for PPC marketing, you will soon be faced with the choice to learn more about PPC marketing and self manage your campaigns, or outsource PPC management.

Of course, there are pros and cons to each .

Let’s compare and contrast each option to better understand the benefits and drawbacks of managing your own PPC campaigns versus outsourcing to an agency or freelancer.

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What is an Impression?

The very first building block to pay per click marketing is to serve an ad. The common Impression.

It is important to understand what an Impression is, because it is the first measurement of your ads.

You might think something like an Impression could be a simple and straightforward PPC topic. For the most part it is. In the PPC marketing world, the short answer to “What is an Impression?“is, an Impression is an ad being served.

Boom! simple as that. Right?

Where the confusion comes into play, is that the simple definition of What is an Impression is conflated with “how many times your ad was shown” or worse “how many times your ad was seen“.

Continue reading “What is an Impression?”

What is a Click?

If you are using any form of PPC to market your business online, you know that you are paying for clicks. It is good to know exactly what is a click.

In terms of PPC marketing the definition of a click is a user taking the action of clicking your Ad.

A click is really that simple on the surface, but here are a few items of note to understand clicks better:

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Is PPC Marketing Right For My Business?

Is PPC Marketing Right For My Business?
Before You Start PPC Marketing, See if Your Business is a Fit!

Is PPC Marketing Right For My Business?” The most important question every business should ask themselves before they start pay per click marketing.

It’s a real shame that so few advertisers do.

The short answer to “Is PPC Marketing Right For My Business” is, it depends.

To get the full answer, let’s ask ourselves a 5 questions to help uncover if PPC is the right fit for your business.

*Interesting to note that none of the following questions have anything to do with marketing, budgets or are about the technical nature of PPC. These are questions about your business and customers. PPC success starts well before a campaign is built!

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How to Calculate Customer Lifetime Value for PPC

Calculating Customer Lifetime Value for PPC Doesn’t Have to Be Complex

You might find it surprising, but in my experience when asking an advertiser the question:

“What is the Lifetime Value of a Customer to Your Business?”

The answer is “I don’t know“.

A completely unacceptable answer. It’s sad really. I implore you, before you start any marketing, especially PPC, make sure you know your Customer Lifetime Value.

Let’s explore how to calculate Lifetime Customer Value for PPC.

Customer Lifetime Value (CLV or LTV in marketing circles) is absolutely the most important number you need to know to help determine if PPC marketing is the right fit for your business.

If you cannot figure out or reasonably estimate what the lifetime value of a customer is to your business, you should not advertise via pay per click.

As a responsible business owner, manager, marketing professional and advertiser ,you should really know the lifetime value of a customer to your business.

In short, quantifying Customer Lifetime Value for your business is of the utmost importance for PPC marketing success from a return perspective. Take the time before you start any marketing, to know your Customer Lifetime Value.

Knowing the Lifetime Value of a Customer for your business will allow you to evaluate your campaigns from a Cost Per Action perspective.

If you don’t have this principal information to utilize when reviewing performance, you are saying “I am not going to worry about the results of my campaign and I am giving up the ability to view success from a value perspective“.

Such a simple calculation to do, that has far reaching effects on your marketing and business efforts.

I will say it again to hammer the point home. If you don’t or won’t know your Customer Lifetime Value, then don’t do any pay per click marketing (at least from a Cost Per Action perspective).

Now that I have said my piece about how important it is to know Customer Lifetime Value, let’s get into how to calculate Customer Lifetime Value for PPC marketing purposes.

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Advantages and Disadvantages of PPC

When considering pay per click marketing you really need to be aware of the advantages and disadvantages of PPC to take the first steps to determining if pay per click is right for your business goals.

The advantages and disadvantages of PPC is foundational knowledge that you need to understand early on. This is where you are going to start to understand if PPC marketing is right for you.

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What Is PPC?

Before you start PPC marketing you need to understand what PPC is.

What is PPC
Lets learn exactly what is PPC

So, what is PPC?

The term PPC is an acronym that stands for Pay Per Click.

In the minds of advertisers, marketers and agencies, the modern definition of “what is PPC” is almost synonymous with Google Ads (formerly Google AdWords) .

Additional similar terms are search marketing and paid marketing.

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