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Anyone who’s spending money or time (or both) on Google Adwords wants to know how their campaigns are performing.

You want to know if there’s room for improvement. You want to know how you compare to other companies. And all too often, the focus is on CTR, or clickthrough rate. What percentage of the people who see your ads are actually clicking on them? You can see the answer in your account, but is it good or bad?

In short, ‘What’s a good Adwords CTR?

Unfortunately, the answer’s not that simple.

In short, ‘It depends‘.

For a longer version of the answer, read a bit further.

For the reasons why you’re asking the wrong question, read right to the end!

Factors Affecting Adwords CTR

Campaign Type

Remember Adwords displays ads in two very different environments:

  • Search results (Search Network)
    The audience here is people who are actively searching for information related to the keyword.
  • A wide range of advertising-sponsored websites of all kinds (Display Network)
    Your ads get displayed on relevant sites (no point in Google displaying them anywhere else, since they won’t get get any revenue unless someone clicks!) However, even though the audience is interested in your area, they’re not actively searching for anything.

No surprise, the CTR depends on whether you’re talking Search Network or Display Network.

Wordstream have analysed CTR for over 2000 clients and come up with the following statistics (accurate as of March 2016):

  • Average CTR for Search Network 1.91%
  • Average CTR for Display Network 0.35%

Industry

Wordstream went further in their analysis. They broke down their clients by industry – and here’s what they came up with.

graph showing Adwords CTR (Search and Display) for various industries

(The image shows data from March 2016, but click through to go to the original page, which I understand they update a couple of times a year.)

Now you have the average Adwords CTR for your industry, for the network you’re advertising on. So if your CTR is above that number, it’s good, right?

Well, probably.

Wordstream are US-based and their data is US-based. It may not be entirely accurate for those of us in Australia. Also, some of those categories are quite all-encompassing. B2B could include anything from virtual assistants to office cleaners to office fit-out companies to sourcing agents. And where does massage fit? Is it a Consumer Service or Health & Medical? The averages are quite different.

The Wordstream data is the best and most up-to-date I could find. (And they have a great blog with a lot of other useful information.) You should at least be able to tell whether you have a big issue with your Adwords CTR.

Unless you’re way below the figures here, you probably don’t need to worry too much about CTR. There may be other things you can optimise.

Why CTR Is Important

1. Google rewards you for a higher CTR.

Let’s look at CTR from Google’s point of view. As mentioned, CTR tracks what percentage of people who see your ad actually click on it. A higher CTR means more chance of someone clicking, which for Google, means more chance of making money. (Remember, Google Adwords only bills you if someone clicks.)  A higher CTR is also a sign that your ad is well targeted and interesting to Google’s users.

So a higher CTR means Google is more willing to display your ad. And that means a higher Quality score, which helps you get a better ad placement for a lower price in the Adwords auction algorithm.

2. CTR is also a really useful tool for improving your content and copy.

Think about it. Two (or more) ads show for the same keyword. If one has a higher CTR, it’s more attractive to those seeing it. Use that insight in the following ways.

  • Pause (or remove) the lower-performing ads. Create some new ads to test against your current best performer. Repeat regularly when you have enough information to be sure the result is statistically significant. (Read about my rule-of-thumb statistical significance test here.)
  • Look at the content in your top-performing ad and see where else you can use it. Did you talk about a specific benefit or a problem your service solves? Make that a headline elsewhere. On the landing page the ad directs people to. On your home page, or relevant service pages of your site. In your other advertising. Repurpose the ad as a Tweet.

Why CTR Isn’t Important

So after all that, why is your Adwords CTR not important? The reason’s quite simple.

Clickthrough creates cost every time. But it doesn’t deliver revenue every time.

Howie Jacobson of Vitruvian posted a great analogy on Quora, which I’ve quoted below.

image of keys on keyboard for LDL and HDL cholesterol

Like cholesterol, there are two different kinds of CTR: the good kind and the bad kind.

Like cholesterol, there are two different kinds of CTR: the good kind and the bad kind.

Good CTR

The good kind represents clicks from qualified prospects: folks who hit your landing page and start drooling (or at least don’t puke in disgust or bolt in terror or die of boredom before they can even hit the back button).

You want to identify your Bullseye prospects by their keywords (in Search networks) and by their questions and desires (in Display network) and write ads that attract them.

Bad CTR
The bad CTR comes from people who are not and never will be serious prospects. They don’t have the money; their requirements preclude your goods or services; they hate your politics; they’ll never trust you to deliver; etc. Lots of reasons for the lack of fit.

You don’t want these clicks! You want to repel them, in fact. Or at least craft your ad so that your non-prospects ignore it completely.

Why are we all so hung up on CTR then?

Possibly because Google are. For them, it makes sense. Higher CTR is an indicator of relevant ads which don’t annoy customers. It’s also a way to make more money – for Google. But for you, higher CTR only makes sense if it leads to higher revenue.

Ideally, you have an end-to-end tracking system. For every keyword and every ad, you can see:

  • Number of clicks and clickthrough rate.
  • Number of conversions and conversion rate. (For service businesses, this is usually an enquiry or a signup to a marketing list.)
  • Number of client conversions. (This is when they sign on the dotted line and you get some real dollars back!)
  • Value of client conversions. (Track revenue, margin, or preferably both.)

In the real world, most of us don’t have all of that. And if your business has a long sales cycle or a long client lifecycle, the data may be out-of-date before you have enough to act on. But it’s possible – easy! – to set up tracking as far as the lead / enquiry stage.

A sign-up or an enquiry means you have contact details. You can stay in touch and nurture this person. That’s far more useful than them simply visiting your site.

What’s more, that conversion tracking can be visible within your Adwords account, or your Google Analytics account if you prefer. Or both.


So by all means, check your Google Adwords CTR.

If it’s way below average, you need to do something about it.

But whatever your CTR turns out to be, remember to look at conversion as well!