Click-through rate is the metric used to determine the performance of an advertisement. It is calculated by the number of times an ad is clicked (clicks) divided by the number of times the ad was shown (impressions). The benefit of click-through rate (CTR) is that it gives you qualitative information at a glance. The problem with CTR is that the information that it provides you is rudimentary, at best.
What you learn from CTR
Your click-through rate will tell you the frequency which your website visitors click through to read more, fill out a related form, take advantage of a CTA, or remain engaged with your content. If you want to know which campaign or offering is out-performing another, your CTR is a quick way to get that information. Similarly, the measure of how well certain keywords are performing for you may often be found in the CTR.
Marketers running email campaigns rely on CTR to measure success, or the lack thereof. Within minutes of sending out an email you can hear gasps, curses, or cheers as the Marketing team studies the CTR.
Ecommerce marketers depend on CTR analysis whenever they launch a pay-per-click ad campaign. As the cost of PPC has skyrocketed in the recent past, all CTR data is highly scrutinized.
What CTR can't tell you
A click-through rate may tell you if a CTA works best for you in the upper left hand corner of a page, or at the lower right. It won't tell you much about how people reacted to the CTA. It is no measurement of efficacy or engagement. Your ROI on that CTA, or ad, or email, is really all that matters; and the CTR is only one component for measuring your ROI. What was the COST per click (or, CPC)? And, most important, what is your bounce rate?
Also, remember that online ads may allow for immediate gratification, in that a click means that someone took the time to investigate an offer. However, when the user does not click, they might still be interested - just not right away. There have been several studies which demonstrate that the click-through has no basis in actual conversion.
Do you really want to rely on CTR as a dependable measure of your campaign's success? What do you think? We'd like to hear your opinions.