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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.