Understanding the Differences and Value of CTR vs Conversion Rate

Is your digital success truly a CTR vs conversion rate question? Should these metrics even be pitted against each other in talks about conversion rate optimization?

To that, we answer: No. Because arguably, there are some efforts best measured with CTR or click-through rate than conversion rate, and vice versa. So the better question you should ask yourselves is really: When should I be looking at CTR and conversion rate?

RELATED READ: Top Conversion Optimization Metrics for Digital Marketers

CTR vs Conversion Rate: What does each of them measure?

To better understand how you can determine which one to use when assessing your conversion optimization efforts, let’s first take a deep-dive into their key differences and values as metrics for conversion marketing.

Click-through rate (CTR)

Measures how many people clicked your ad or relevant links and landed on your website and/or pages. Google defines CTR as “a ratio showing how often people who see your ad or free product listing end up clicking it.”

You can use this metric to gauge how your digital marketing initiatives such as your online ads campaigns are doing.

Normally, you can find out your CTR with the use of analytics tools, but if you’re at a lack for those, you can compute for CTR by using this formula below:

Click-through Rate (CTR) = Total no. of Clicks / Total no. of Impressions

What is a good CTR and what does it mean?

Generally, a high CTR suggests that audiences find your ads relevant, helpful, and enticing. Users are constantly bombarded with ads and other online content; making capturing their attention difficult.

According to Wordstream, a “good” CTR in Google Ads would depend on the industry in which your business belongs and where the ad or listing is shown. So benchmark the performance of your campaigns, accordingly.

Is a high CTR always good? No. 

Because a CTR isn’t always synonymous to actual sales; meaning you could be spending a ton on pay-per-click ads for nothing.

READ ALSO: PPC Management Process Guide for Ads That Actually Convert

A high CTR may look impressive, but that would depend on your ad campaign goals. If you are aiming to boost your online sales through a pay-per-click campaign, and none of your clicks actually lead to a sale, then that’s bad news for your business.

Imagine shelling out $100 PPC campaign with zero returns. Punch in the gut, right?

Pro tips to help with your CTR campaign

Like any other aspect of digital marketing, your CTR campaign requires research and careful planning. Here are some pro-tips for you:

• Understand your target audience through insightful consumer research and use what you learn in designing your ads, copies, and landing pages.
• Conduct thorough keyword research and use the ones most relevant to your business and intended audience. This helps your ad get discovered by the most qualified customers.
• Write copies that are emotionally resonant with your target audience and provide urgency and/or catch attention along with high-quality visuals.
• Always cap it off with a compelling call-to-action to clearly signal to your users what is the next step in the funnel.

Conversion Rate

Conversion rate, on the other hand, measures how many visitors actually completed an action out of those who interacted with your ad and/or links. This metric shows the rate of various goals including but are not limited to:

Google defines conversion as “an action that’s counted when someone interacts with your ad or free product listing and then takes an action that you’ve defined as valuable to your business, such as an online purchase or a call to your business from a mobile phone.”

• Newsletter sign-ups;
• completed purchases;
• addition to carts, or
• other profitable actions.

Put mathematically, it’s the average number of conversions per ad interaction, expressed as a percentage. It is computed by:

Conversion Rate (CR) = Total Conversions / Total Ad Interactions

Does a conversion rate equal a sale?

No. Just like CTR, your conversion rate doesn’t immediately point to a sale. It does, however, signal how your customer interact with your content, channels and, ultimately, your products and services.

Conversions can be span from interested audiences (these may sign up initially for your newsletter) or people who are already considering converting (those who complete and send in a service inquiry form).

That said, you’ll have to be specific when defining what kind of conversions you’re tracking. Is it conversions in the sense of lead acquisition? Or is it conversions for lead nurturing and closing the sale? Accurately defining these will be the first step before tracking conversions and hoping to get an insight into your customers’ purchase journey starting from your ads all the way to a close (or an abandonment, as the opposite result).

When does a conversion actually lead to a sale?

The key to turning a conversion into a sale is how you strategize for leading these interested leads further down the funnel into a full sales conversion.

This is the part where conversion rate optimization practices come into play.

RELATED READ: Lead Management: Looking Beyond the Surface to Discover What is Affecting Your Conversion Optimization Efforts

Conversion rate optimization is a set of techniques that turns your website traffic into actual buyers. Digital marketing agency Propelrr performs through the following actionable steps to optimize its clients’ conversion rates:

1. Research

In this stage, digital marketing specialists conduct an in-depth analysis of your business focusing the following:

• Company objectives, unique selling points and customer objections
• Conversion funnel review
• Competition research

2. Hypothesis

This stage involves the drawing of an assumption on which the conversion optimization strategies are based. This will help you better identify the areas to optimize and test the predicted outcome. 

3. Building data-driven solutions

Next the digital marketing specialists build assets and solutions based on the drawing board and crafted hypothesis. These solutions include Landing Page Optimization, Page Redesign and Information Architecture. 

4. Testing and evaluation

Finally, the assets and solutions earlier mentioned need to be tested and evaluated. This is commonly done through A/B testing or split testing.  This stage involves challenging the existing copies and pages based on the hypothesis. T

When is it better to look at CTR vs conversion rate?

As mentioned above, CTR and conversion rate are inherently different. Hence, one can paint out a clearer picture versus the other in seeking to understand your customer’s purchase behavior and similarly, how well your campaigns are doing.

CTR is metric best used for evaluating

• Effectiveness of your ad elements

CTR signals how interesting and/or relevant your ads are to audiences. A low CTR could mean that your ads are not communicating your value proposition enough, or it could mean that your asset is poor in quality.

Since ads entail costs when deployed, you’ll want to A/B test your ads so you can optimize for the best results, prior to cashing out to run the campaign.

• The visibility of your ad

CTR is the result of comparing the amount of Clicks you get per Impression. Therefore, it’s also a good signal of whether or not your ads are actually visibile to your audiences.

This poses another possibility as to why your ads aren’t working as well as they should. In that, the messaging may be correct, but due to factors like high competition for certain keywords, you may not be winning as much real estate on the internet as you think.

Why is investigating both important in conversion optimization?

Remember: Conversions happen on your website and/or landing pages. Meaning you can’t hope to convert an audience that doesn’t bother to click on your ads.

Your ads – whatever format they may be or channel they are deployed – are the crucial entry-point for your audiences into discovering more about your product and service.

Once they understand and trust your brand more through the content presented in the landing pages, you can count on them eventually converting.

Conversion rate is a better metric for gauging

• How optimized the user interface and/or experience is

Have you ever abandoned a purchase because the product details or payment portal was loading far too slowly? If you have, then count on the possibility that your customers have the same thought process.

Conversions often get abandoned because of less than optimal customer experiences with your website. In seeking to get your customers converting as fast as possible, make sure to assess how optimized your website and pages are for providing a seamless purchase journey for your customers.

REALTED READ: Fool-proof Optimization Tips to Boost Landing Page Conversion

• If your product messaging is resonating with your audiences

Yes, the conversions on your website also ride on your website copies. That’s how intentional of a practice conversion rate optimization is.

When it comes conversion copywriting, you’ll have to think about how you tell your audience about your value propositions, addressing their fears and objections, and so much more.

If your ads are winning the clicks, but your customers suddenly lost interest (without even proceeding to the next step!) while on the page, then chances are your copies aren’t working as hard as they should.

Make sure to continually evaluate, iterate, and test your page copies to see which ones are able to convert visitors better.

CTRs and conversions: Signals for optimization

CTR and conversion rate may be fundamentally different from each other, but it’s exactly their differences that make them equally powerful as metrics to inform your optimizations.

Instead of magnifying CTR vs conversion rate, it’s best to look at both of them and allow each metric to inform and develop more robust ads and landing pages.

With all that’s been said for both metrics, we reiterate that: In conversion optimization, the question is far from being a matter of one’s importance over the other. Ultimately, they go hand-in-hand in terms of:

• Measuring the performance of your ad campaigns;
• identifying areas of improvement, and;
• continuous experimentation to increase your chances of converting audiences.

Key takeaways

Again, this is not an argument pitting CTR vs conversion rate. Rather, it’s a case for making sure that you regard both with equal importance in optimizing your campaigns. Keep in mind these important points:

• Be clear with your goal. Do you want to boost awareness or realize profit? Then, choose the most effective metric to measure your success.

• Develop a deep understanding of your target audience. Whether you use CTR or conversion rate, it is essential to understand your target audience on a deep level. Go beyond their demographic characteristics and know their motivations, desires and intent.

• Consider working with an agency with the skills, knowledge and technology in digital marketing.  

What metric do you use to measure your digital marketing success? Let us know in the comments, or on our social media accounts: Facebook, LinkedIn, or Twitter.