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With search engines charg­ing for clicks and not impres­sions and typ­i­cally being con­sid­ered a direct response chan­nel, you may be for­given to think that there’s lit­tle need to opti­mise for click-through rate (CTR). How­ever, since CTR is the major­ity fac­tor to deter­mine the so-called qual­ity score, which impacts the cost-per-click (CPC), this will affect the suc­cess of the cam­paign; regard­less of if objec­tives are sales, leads or traffic.

Why are search engines doing this? The adverts CTR is an impor­tant sig­nal of “qual­ity” for search engines. The logic is that if the advert matches the users query, they will click it. There­fore the higher the CTR, the more rel­e­vant the advert is assumed to be. And of course, since the search engines charge adver­tis­ers per click, their rev­enue increases.

The fol­low­ing chart out­lines the main fac­tors that deter­mine the qual­ity score for a key­word on Google Adwords. This qual­ity score is then used in an algo­rithm that deter­mines click-cost and posi­tion.

Due to this, it’s very pos­si­ble that an advert appear­ing in top posi­tion is pay­ing less per click than the one below. The search engines are of course max­imis­ing their rev­enues by the higher num­ber of aggre­gate clicks that the top CTR advert is producing.

To make things more com­plex for adver­tis­ers, con­sider the fol­low­ing sce­nario: an advert with lower CTR is con­vert­ing very strongly on the web­site, as it effec­tively pre-qualifies the traf­fic. In com­par­i­son a high CTR advert for the same cam­paign con­verts poorer, as it doesn’t seek to fil­ter out unwanted traf­fic at the ad level, but instead on the land­ing page. Which should you run?

At this stage you would need to cal­cu­late the actual cost-per-action and vol­umes that can be achieved, depend­ing on objective.

In prac­tise, it’s dif­fi­cult to make this type of direct com­par­i­son on a live cam­paign, due to the ever-changing nature of com­pe­ti­tion, qual­ity score, posi­tions and costs. How­ever, from expe­ri­ence, typ­i­cally for b2c the ben­e­fit of a higher qual­ity score from opti­mis­ing ad copies towards CTR (with result­ing low­ered CPC and higher posi­tion) out­weighs the alter­na­tive, whereas for B2B it might not be the case.

Related posts:

1. Get­ting to grips with click fraud