Paid Search Kpis: Conversion Rate vs Click-Through Rate

Google Ads has a LOT of metrics to keep an eye on. It can be mind-boggling to try and get used to them all.

In this article, we’re going to discuss two of the most important metrics for pay-per-click advertising:

Click-through Rate and Conversion Rate.

It’s impossible to avoid this pair in Google Ads, not that you should be trying to avoid them at all. Let’s find out more about them, and discover how your campaign success is linked to each one.

What is the Click-through Rate?

Click-through Rate (CTR) is the percentage of people that clicked on your ad to visit your landing page or website. You can calculate it with the following formula:

Clicks ÷ Impressions = CTR

For example, if your ad received 50 clicks and 1000 impressions, then the CTR is 5%.

So, what does it mean if your ads have a great CTR?

4 Major Benefits of a Good CTR

CTR is one of the best metrics to gauge performance of your ads. A good CTR can tell you a number of things about the ad, and benefit your campaign in several ways:

1. It’s a Sign that You’re Doing Things Right.

A high CTR is a good sign that there is harmony between the different aspects of your ad, such as keywords, images, ad copy, and positioning.

Furthermore, it tells you that your ads are relevant and engaging. People are intrigued by them, enough to click on the ad.

As your CTR improves, the values for expected CTR on your keywords will also improve. This can benefit your Ad Rank.

2. A Good CTR improves Your Conversion Rate.

More clicks eventually contribute to more conversions. That initial excitement that viewers feel when they engage your ad can easily carry through, causing them to answer your call-to-action.

Whether it’s a sign-up form or a purchase, there is no doubt that having a higher CTR can benefit your conversion rates.

3. A High CTR Earns a Higher Ad Impression Share.

In all Google properties, including Gmail Ads and the Google Display Network, a higher CTR can save you some money.

As your CTR increases, you stand to earn a lower cost-per-click (CPC). While this may not seem like much in the beginning, the savings can really add up as your clicks accumulate.

Furthermore, a great CTR also has a positive impact on your impression share, which means your ads will start showing up more often.

4. A Good CTR improves your Account Quality Score.

The benefits of a high CTR don’t stop there. This metric is an integral component of your ad’s quality score. Therefore, when CTR is performing well, your ad will rank higher, at a lower CPC.

This reduces wasted spend, saving you money, and ultimately, increasing your overall return on investment (ROI).

What If Your Click-Through Rate Is Not Up To The Mark?

As you can see, it’s pretty clear that the click-through rate metric wields considerable influence over an ad’s performance, and also over your advertising budget.

But what if it’s not doing so well?

A lower CTR is a signal that you need to assess your campaign to find out what’s going wrong. It could indicate that you are using poor keywords, or your ad copy is irrelevant or uninspiring for the target audience.

In any case, it’s important to act before you sink any more of your budget into a failing ad. You can get help from PPCexpo by running our Audit Report, which provides the insights you need to get your ad on track.

What is the Conversion Rate?

This metric shows you the percentage of site visitors that completed the desired action. You can calculate it with the following formula:

# conversions  ÷ # ad clicks

For example, if you received 50 conversions from 1,000 clicks, your conversion rate would be 5%.

3 Big Benefits of a Good Conversion Rate

Let’s see what a high conversion rate can tell us.

1. You are Right on Target.

It doesn’t matter what business you are in – if conversion rates are high, it’s good news! This is a surefire sign that you are successfully convincing people of your messaging. You are converting leads into customers, and the more you do it, the more traffic Google will send your way because it realizes that you deliver what users are searching for.

2. High Conversion Rate leads to a Good ROI.

In any business, sales are a top priority. You’ve probably been thinking about sales before you even created your website.

As your conversion rate increases, your business will make more sales, and real growth can happen. Over time, this helps you achieve your business goals and generate a solid return on your initial investment.

3. Conversion Rate Optimization.

When you first get into PPC advertising, it will take some time and patience to refine your ads, landing pages, and website for your audience.

Eventually, you can improve the conversion rate optimization of the buyer’s journey, so that it’s much easier to convert leads into paying customers.

More importantly, you can get them to become repeat customers, which allows you to get more value from each customer. This effectively reduces your customer acquisition costs.

What if Your Conversion Rate is Not Up to the Mark?

The way in which you engage prospective clients directly influences their trust in your brand. You need to establish trust as a foundation for making a sale.

If your conversion rates are lagging, perhaps you need to assess the relationship to determine whether you are providing the value and care that customers expect from brands today.

Ultimately, your sales funnel must be consistent, so if you are getting lots of clicks, but not a lot of conversions, perhaps there are some mixed messages or over-complicated steps on your landing page. Conversion rate optimization (CRO) is an important factor to learn. Here is how you can improve it.

Clicks and Conversions are Cornerstones of Advertising Success

While they are very different metrics, there is an intrinsic link between click-through rate (CTR) and conversion rate.

Marketers should seek to streamline their funnel to make the customer’s journey effortless, from the ad to the landing page to the call-to-action (CTA).

When everything is relevant and engaging for viewers, your clicks and conversions will rise together as you attract more qualified traffic, and then convince them to answer your CTA.

After that, your business can benefit in many ways. Measuring CTR and conversion performance are important to gauge the overall progress of you PPC campaign. PPCexpo Reports can help. Run the reports today to plan your better future.