In the last couple of weeks on PPC Hero, we have been writing a series of posts themed, “how can I make it better?” Jen started the series with tips on improving your account structure. Amy then gave readers 6 steps to raise quality score, while Erin recently posted tips on improving poor landing pages.

Today, I am going to continue the series with tips on how to improve the ever-important click-through rate.

To give a little bit of basic background information – an ad’s click-through rate, or CTR, is the number of clicks your ad receives divided by the number of times your ad is shown, or the number of impressions the ad receives. So, if your ad is shown ten times and only clicked once, your CTR is 10%. Keywords also have click-through rates, which correlate with the number of times a keyword is queried and the number of times the searcher clicks on the ads.

The metric is important because it allows you to better understand when an ad or a keyword is not performing well, which I’ll explain a little bit more below. It’s also important because the CTR, as Amy explained in her post on improving quality score, is one of the determining factors in your account’s quality score. Together the CTR and quality score determine an ad’s position on a search engine results page, as well as the minimum cost per click.

This Introduction to the Google Ad Auction by Google’s Chief Economist, Hal Varian, offers a good explanation of the relation between CTR, Quality Score, and Ad Positioning. In the video, Varian says the CTR is like a rating system for Google to know what ads are most relevant to what queries.

So, now that we know what a click-through rate is and why it is important, we can get to the good stuff – how to improve it.

Identify the Problem

You can begin to evaluate your CTR by looking at a snapshot of your entire account. Identify the campaigns or ad groups that have a low CTR and then you can drill down to identify if the problem is your ads, your keywords, or both.

Relevant Keywords

The first step to a good CTR is making sure you are targeting the right terms. You want to reach a wide audience but please don’t target terms that are not related to your goods or service. It’s spammy and Adwords will see right through it. The second part of this is to make sure that your terms are tightly themed within ad groups. There are some who suggest 5-10 keywords per ad group. If I worked for a community college an example of a tightly themed ad group would include: nursing classes, class for nursing, classes to become a nurse, nurse class, class for nurses, etc. I could then create a second ad group for nursing courses, one for nursing schools, etc. The reason tightly themed ad groups are important gets us to my next point, which is better targeted ads.

Better Targeted and Creative Ads

If all my keywords within an ad group are relevant and tightly themed, I can better target my ads to those terms. If we return to the nursing example, all of my ads within that ad group can include a variation of the word nurse and class. If I threw in nursing schools to that ad group, but it was matched with an ad that said nursing course, I might lose a visit to a competitor whose ad included nursing school. The more targeted your ads are to the keywords within an ad group, the more likely will click on your ad as it’s more likely to pertain to their query.

The second part to this is creativity. In order to achieve a good CTR, you need people to click on your ads. Relevancy can only get you so far and you’ll need to rely on your creativity to edge out the competition. How are you different? What make you stand apart? Using this in your ad text might draw more attention and increase traffic. You can review ad writing 101 for more ideas on writing good ads.

So, What’s a good CTR?

Well, it depends. Your CTR can vary from campaign to campaign. For instance, some advertisers choose to bid on competitor terms. Well, we just talked about how the correlation between keywords and ads are important. If you have a campaign full of competitors, but your ads are obviously not going to include that competitor’s name, then your correlation is going to be non-existent and your CTR for this campaign might suffer in comparison to a campaign with highly correlated keywords and ads.

Can a high CTR be a bad thing?

Stemming from a Wordstream post on CTR, I wanted to give a few examples of when a high CTR might actually be bad for business. If you have a broad match term in your account, it may lead to increased traffic, and even if the CTR is good, it doesn’t necessarily mean the traffic is relevant. For instance, if you sell women’s shoes and you have the broad matched term red shoes in your account and a man shopping for red sneakers clicks on you add, he is probably unlikely to convert. But, because the CTR is good, you may achieve a better quality score for that term and your ad position may go up, which could increase traffic even more. Spend is increasing, while your conversions are not.

Another example of this is DKI. If you use DKI in your ads, you’ll likely see a high CTR for those ads, because it’s matching the precise query of the searcher. However, just as in our example above, that query might not generate conversions.

Google Instant and CTR

There has been a lot of talk lately about how Google Instant will impact CTR. The issue is that more ads will be showing more often as people use Instant potentially increasing impressions without necessarily increasing clicks. In turn, this could decrease CTR, which we know leads to a decreased quality score and increased minimum bids. Google has made it clear that searchers will need to hold a query for 3 seconds in order for an impression to register. Keep checking back with PPC Hero as we update the site with any new information or findings regarding the impact of Google Instant.

In the meantime, review your CTR and find areas where you can improve it. Google is going to give your account a price discount for highly targeted, and relevant ads, so if your account is suffering from a low CTR it’s a good indication that you are spending more money on minimum bids than you need to.