April 12th, 2010
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.
|Max bid||CTR||Quality Score||Actual CPC||Conversion Rate||CPA||Volume
(at on 2k
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.