4 Situations Where CTR is Not the Best KPI
Digital marketing provides us with an abundance of data to measure campaign performance. With all of this information, we have to ask ourselves which metrics should be used as key performance indicators (KPIs). Click-through rate (CTR) is a tempting choice, but as you’ll see, CTR is not always the best tool for the job.
1. You are running a direct response (DR) campaign
If you are able to define a campaign conversion, cost per acquisition/action (CPA) is an effective metric for measuring success. CTR shouldn’t be totally overlooked; it can help you determine performance among individual dimensions such as creative version or ad size, for example.
If your campaign conversion is complex or a “big ask”, consider implementing hard and soft conversions. Soft conversions can help you discover campaign dimensions that drive traffic with intent. They may not be converters, but with further exposure to your message, these visitors may buy your product or sign up for your service.
2. Not all tactics are created equal
Comparing CTR’s between tactics can be similar to comparing apples to avocados. A good apple is sweet and crunchy, while a good avocado is buttery soft. Similarly, some tactics are effective for creating awareness or driving engagement, while others are good at driving clicks and conversions. To further complicate things, benchmark CTR’s differ among verticals and brands. B2B CTR’s are often lower than B2C, and brands with less awareness may have a lower CTR than competitors in the same vertical with more awareness. You should take these factors into consideration when making comparisons.
3. Your campaign is bought on a CPC basis
Paid search and paid social (Facebook) are two examples of campaigns purchased on a CPC basis. Does click-through rate matter in a CPC campaign? Yes and no. CTR can help you compare creative versions and performance of similar campaigns. For example, if you have executed several paid search campaigns for clients in a certain vertical and the average CTR is 1%, a campaign above or below that level may need a second look to determine why the CTR is low. However, at the end of the day, it is the cost you pay per click, and ultimately the CPA, that matters most in this type of campaign.
4. Your campaign is bought using a dynamic CPM
In a fixed CPM campaign, such as a site direct buy with your local news outlet; click-through rate plays an important role. An increase in CTR will provide more clicks and conversions assuming a consistent conversion rate. With a dynamic CPM campaign, there are more variables in the formula, which decreases the importance of CTR as a KPI.
Programmatic media buying enables advertisers to pay the right price for the right impression, and is often transacted using a dynamic CPM. Metrics such as CPC and CPA tell a better story about performance than CTR in this case.
In a campaign with a dynamic CPM, lower CTR tactics can and often do outperform a higher CTR tactic. For example, a potential customer within a one-mile radius of a business is arguably more valuable than a person three miles away, but does that mean someone within three miles shouldn’t be marketed to? Not necessarily, but you may want to pay less for the person further away.
Should we stop looking at CTR as a KPI? Of course not. However, as you can see, CTR is not the only KPI you should consider when measuring campaign performance.
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Ryan has his hands in a bit of everything, but he mostly focuses on client success and the technical aspects of advertising. Ryan likes 90’s hip hop, heli-skiing, and spending time with his family.