Click-through rate (CTR) is one of the most important metrics for measuring eCommerce store performance. It’s a measure of how many people click on an ad, which can help you evaluate how well your ads are resonating with your target audience.
In this guide, we’ll cover what click-through rate is and how you can use it to improve your eCommerce store. We’ll also share some tips for improving your CTR and give examples of how you can use the data from this metric to drive more sales.
Table of contents
- What is Click-Through Rate (CTR)?
- How to calculate Click-Through Rate?
- Why is Click-Through Rate Important in Ecommerce?
- What is a Good Click-Through Rate for Ecommerce?
What is Click-Through Rate (CTR)?
The Click-through rate is the percentage of users who click on an ad. It’s a measure of how well your ads are performing and can help you determine whether or not your campaigns are effective.
For example, if you were running an online store that sells office supplies and wanted to promote new pens in your weekly newsletter, a click-through rate of 5 percent would mean that 1 out of every 20 people who received the email clicked on the link to learn more about these pens. The same is true of advertising on other platforms, such as Facebook or Instagram.
How to calculate Click-Through Rate?
The first thing you need to do before you can determine whether a clickthrough rate is good or bad is figure out how it's measured. There are two metrics you need to measure clickthrough rate:
- The total number of clicks
- The total number of impressions
The number of clicks divided by the number of impressions = clickthrough rate
Clicks refer to the number of times your ad was clicked on by users. Impressions are a count of how many times your ad appeared on the page.
You can calculate the clickthrough rate based on impressions by dividing clicks by impressions and multiplying the result by 100.
For example, if you had 100 clicks and 1,000 impressions, then your clickthrough rate would be 10%.
Why is Click-Through Rate Important in Ecommerce?
The click-through rate is a key metric to monitor when you’re running an ad campaign. It tells you how many people are clicking on your ads, which is important because it means they’re interested in what you have to offer.
The higher the CTR, the better your campaign performs and the more likely it is that users will convert into customers (or leads). If you’re seeing low click-through rates, it’s likely that your ads aren’t resonating with users and should be modified accordingly.
Measuring and understanding CTR will help you understand many areas of your business and ultimately make improvements where needed.
1- Better conversion rate
As we have mentioned before, Clicking through is a step closer to conversion. So the more clicks you are getting, the better your chances of higher conversion. A study by WordStream found that high CTR correlates with higher conversion rates. This means by improving CTR, you are boosting conversions and consequently revenues.
2- Evaluating the performance of marketing campaigns
A low CTR indicated that something wasn't done right in this marketing campaign. Starting from audience targeting, ad copy, ad positioning, CTA, or the design of the ad; "format, colors and images". Without watching the CTR metric there is no way you can find out how well a marketing campaign went.
3- Improving cost-per-click "CPC" rates and ROI
Most paid marketing campaign costs can be broken down by click. In other words, you can calculate how much you paid for this campaign vs. how many clicks you got or how many people landed in the desired destination.
If you spend a lot of money on a campaign and you get low CTR, then the cost per click will be super high, and the ROI will be extremely low. With a deep understanding of the CTR metric, you can improve CPC and eventually scale up ROI.
What is a Good Click-Through Rate for Ecommerce?
When you set up an ad campaign, whether it's on Twitter or Facebook, or Google Adwords, the goal is always to get clicks. However, depending on factors like your industry and platform type—e.g., social media vs search engine marketing —your clickthrough rates will be different.
A good clickthrough rate for eCommerce is one that drives the right kind of traffic to your site. For example, if you're targeting a broad audience and want them to sign up for your newsletter, then a 3% clickthrough rate may be acceptable.
But if you're looking for sales from an ad campaign, then you'll likely want a much higher conversion rate.
Generally, a good CTR for any eCommerce marketing channel in 2022 must be greater than the average CTR of the channel. Anything lower means you’d need to pause and strategize your marketing campaign.
Here are the average CTR of some eCommerce marketing channels in 2022:
- The 2022 average CTR for Ecommerce Facebook ads is 0.90%
- Good CTR for Google Search ads is 3.17%
- Good CTR for Google Display Ads is 0.46%
- Email marketing CTR is around 2.3%
- Instagram Feed Ads CTR is 2%
- Good CTR for Instagram Feed Ads is
- Snapchat Ads CTR is 1.5%
- The average CTR for Youtube Ads is 0.65%
- TikTok Ads CTR is 1.0%
What are the CTR Benchmarks?
Clickthrough rate (CTR) benchmarks differ depending on the marketing platform and the industry type. Different industries have different expectations for CTR, and each platform has its own benchmarks.
For example, Facebook’s average CTR benchmark across 18 industries in 2022 is 0.90%. In comparison, LinkedIn’s average CTR benchmark is between 0.44%-0.65%.
In addition, You can expect a higher clickthrough rate for search engine ads than for social media ads.
Since different industries have different average clickthrough rates, some industries have higher benchmarks than others. The goal is to beat the industry average of your market, which will help you to stand out from other advertisers on that platform.
How Can AI Help You Improve CTR For Your Ecommerce Business?
There are many different ways that you can improve your click-through rate (CTR) as an eCommerce business. For example, we’ve talked about creating engaging headlines and designing split tests for ad elements. But bringing everything together into one cohesive strategy may not be feasible as an active eCommerce store.
However, one resource you can leverage is AI and machine learning platforms that have been designed to help you optimize your ad strategies.
The key is to use the data that these platforms provide to inform decisions about what content, copy and design elements work best for specific audiences.
For example, you can use an AI platform like ConvertedIn to create a personalized ad campaign that’s built around your customers’ interests and behaviors. You can then use this information to optimize your ads based on what works best for your audience. This will help you improve your click-through rate (CTR).
ConvertedIn uses machine learning algorithms that are able to identify patterns in your data and suggest ways that you can optimize your campaigns.
Convertedin can help you find the best-performing ad copy and images to increase your CTR by up to 50% over traditional manual ad optimization methods.
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