Conversion Rate vs Click Through Rate: What’s The Difference? And Why Are They Important for Paid Advertising?

Conversion rate VS click through rate

When running an online marketing campaign it is important to measure your click-through rate (CTR) and conversion rate. Both play a big part in determining the success level of a marketing campaign. 

Click-through rates and conversion rates impact different stages in the marketing/sales funnel. At the top of the sales funnel, the click-through rate measures the actions users take before making it to your website. Whereas, conversion rates sit at the middle/bottom of the sales funnel and measure the actions visitors take when on your website.

In this article, we will discuss what makes a conversion rate and click-through rate different and the importance of both concerning marketing campaigns.  

What is Click-Through Rate?

Click-through rate: 

Shown as a percentage, the click-through rate measures the number of people who clicked your ad to visit a website or landing page. 

The Formula for Calculating CTR?

To calculate the click-through rate you must divide the total number of advert clicks by the total number of impressions (i.e. the number of people who viewed the ad). 

For example, your ad was seen by 3,000 people and generated 200 clicks. 

200 (Clicks) ÷ 3000 (Impressions) = 0.067 X 100 (percentage) = 6.6% CTR

Depending on the industry and offer click-through rate will vary. To find out what is considered a good click-through rate, we recommend researching your industry’s average CTR. Once you have established the average you can set some business goals and begin to work towards achieving a higher CTR than this. 

Why is CTR important for Google Ads? 

Not only does a click-through rate let you know how effective an ad is at attracting potential customers but a good CTR will increase your Google ad’s Quality Score and Relevance Score. 

It is important to track your click-through rate metric as it helps you to understand your customers. It tells you what works and what does not when trying to reach your target audience. 

A lower ctr could be a sign that you are either targeting the wrong audience or your targeting language is not attracting the right audience. 

Advantages of a Good CTR? 

CTR is an excellent way of measuring the effectiveness and performance of your ad campaign. A good CTR tells you several things about your ad and tracking this rate regularly can be extremely beneficial for your marketing campaign: 

  1. A Good CTR = Indicates your ad has an effective offer. 

Having a good CTR is a clear sign that all the components of your ad such as images, keywords and ad copy are coming together to create a compelling offer that attracts and engages potential customers. 

  1. A Good CTR Improves The Number of Conversions

The more clicks your ad has the more conversions you will have. When someone engages with your ad they have a chance to complete your CTA (i.e. a sign-up form, PDF download or purchase). 

  1.  A Good CTR Earns a Higher Ad Impression Share

A high CTR for Google Ads will have a positive effect on your impression share. This means that your ad will show up more and be seen by more people. 

  1. A Good CTR will Give You a Better Quality Score. 

When CTR is performing well, your ad will rank higher, at a lower CPC.

This helps to reduce wasted spend, saving you money and increasing your overall return on investment (ROI).

What Does A Low Click-Through Rate Mean? 

If you have a low ctr this may be a sign that you need to improve your targeting, your offer or sales copy. One of the main things to consider is your use of keywords. If your ad is not performing it is likely that you have chosen non-performing keywords or maybe your ad copy is not targeting the correct audience. 

How To Improve Your CTR? 

  • Consider your target audience – When building an ad it is important to consider the type of people you are targeting. By having a clear understanding of who you are targeting you will be able to build an advert that engages and attracts your target audience.
  • Keyword research – Using a keyword research tool will help you to find specific phrases or words your target audience is searching for. Including these words and phrases in your ad can help attract more of your target audience to engage with your ad. 
  • Use images -When possible using images and visuals are a great way to increase your CTR. A great way to figure out what type of images work best for your company is to run A/B testing as certain types of images will outperform others depending on your audience. 
  • Include a strong call to action (CTA) – By using a CTA you are prompting your audience to click your advert. For a CTA to work it must be an enticing offer.
  • Optimize your headline and copy – We recommend using keywords throughout your heading and copy. Use this opportunity to appeal to your audience’s wants and needs and tell them how purchasing your product or service can solve their problems. 

What is Conversion Rate?

Shown as a percentage, conversion rate displays the number of visitors that completed the desired action on a page out of the total number of overall visitors. 

For example, if you have a website where you are selling a product or service, the conversion rate will be the total number of sales of that product or service from each visitor. 

Other desired actions could be calling a contact number, subscribing to newsletters, filling out a form etc. 

How to Calculate Conversion Rates?

To calculate the conversion rate you must divide the total number of visitors to your website or landing page by the number of desired goals completed.

This formula will change slightly depending on the type of conversions you’re measuring.

For example, if you are measuring the conversion rate of people visiting your site that turned into leads: 

Number of leads ÷ Total number of people visiting your website x 100 = Conversion Rate

Whereas, if you wanted to measure the conversion rate for the number of people who subscribed to your newsletter after clicking your ad the formula would be: 

Number of people who subscribed to the newsletter ÷ total number of people who clicked the ad x 100 = Conversion Rate. 

Conversion Rate Optimization (CRO) Tactics

Conversion rate optimization allows you to get more customers and increase sales with the traffic you already have. It can require regular testing and improvement to get it right. Here are some of the best ways to optimize your conversion rate: 

  • Use retargeting ads to keep website visitors engaged. When a visitor does not convert straight away it is important to get your product or service in front of them again to spark interest.
  • Add a live chat to your site. If a website visitor is interested in your product or service but wants to ask a few questions before they purchase, this allows them to speak with a customer service representative without leaving your site. Therefore, once their questions have been answered they are more likely to make a purchase if they are still on your site.
  • Offer an incentive or some sort of free material (i.e. a downloadable PDF) in exchange for their contact details (name and email). This will add the visitor to your email marketing list, giving you another opportunity to entice them with your product or service. 
  • Add customer testimonials or reviews to your ad or landing page. This will give the visitor more confidence in their purchase decision. 
  • A/B test elements of your landing pages, such as images, call-to-actions, taglines, descriptions, button positioning, the format of contact forms etc. 
  • Create a strong CTA – A good call to action can be the difference between getting a conversion or not. If your call to action is weak or unclear then your conversion rate will be low. Typically the sooner a CTA appears on your site the better. If a visitor has to scroll a whole page to find it, they are more likely to click off and leave your site. 

 Benefits of Conversion Rate Optimization

Conversion rate is an important metric to check frequently. This is because it directly impacts your business’s revenue and sales. Optimizing your conversion rate means optimizing your website or landing page to turn more visitors into paying customers and increase sales. 

Here are some of the benefits: 

  • Increased ROI – an increase in conversion rate means an increase in sales. This is great for the overall growth of your business. 
  • By improving your conversion rate you will gain more customers from the same amount of traffic, which results in a lower cost per acquisition (CPA).  
  • Increase in repeat customers – once visitors convert to a customer they are more likely to shop with you again. If they are happy with your product or service it is likely that they will tell their friends and family about it, sending more potential customers to your site. 

Conversion rate vs. Click-through rate: which one should you measure?

If you are wondering which is the most important metric to measure the answer here is pretty simple. Both click-through rates and conversion rates are core factors in determining the failure and success of an online marketing campaign. Therefore, as a marketer, you want to be measuring both and taking action to optimize when necessary.  

FAQs

What is a realistic conversion rate for a new website?

A good conversion rate is above 5%, with some businesses achieving double digit conversion rates depending on the offer. However, for a business with a new website, it is not realistic to achieve this straight away. Across industries, the average landing page conversion rate was 2.35%, yet the top 25% are converting at 5.31% or higher. 

Does a good website increase the conversion rate?

The quality of a website has a big impact on its conversion rate. In particular, some factors that contribute to great CRO are: compelling copy, a great offer, social proof and page loading speed. The quicker a webpage loads, the more likely a user is to perform the targeted action on that webpage. 

What are the limitations of the click-through rate?

The click-through rate does not tell you the quality of the visitor. Just because they have clicked on your ad does not necessarily mean they are interested in your product or service and will convert into a paying customer. CTR does not tell the entire story behind a click. It doesn’t tell you why a user clicked an ad and what happened after they clicked.

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