When marketing your small business on the internet, there are several ways to do it. One such method is through Google Ads, sometimes called pay-per-click or PPC ads.
There are numerous pros and cons to this marketing, such as:
- Pro: Your return on investment is nearly double what you spend
- Con: Mistakes can cost you dearly
- Pro: Ads will let you send people to specific landing pages
- Con: You pay for clicks regardless of conversion
- Pro: Get a leg up on your smaller competitors
- Con: Hard to compete with bigger companies
- Pro: Google Ads can help you focus on the local market
- Con: Keyword pricing can impact your budget
I would be missed if I didn’t also mention that most small businesses will usually spend between $9,000 and $10,000 per month on PPC ads, or as little as a few hundred dollars. Also, the potential of Google Ads is practically limitless.
You may be saying, “this is great, but what about the click-through rate of Google Ads?” “Or how is this going to help me get more business?” Well, that is a bit more of a loaded question that I hope to address in this article further, so without further adieu, let’s get to it!
So What Is Click-Through Rate, Anyway?
In digital marketing, click-through rate (CTR) is a metric that measures the number of clicks you as the advertiser receives on your ads per number of impressions.
You can view your CTR within the dashboard of your Google Ads account. A high CTR is critical to your PPC success because it directly affects how much you pay for each click and the Quality Score of your search ad.
What is Quality Score?
Google’s Quality Score is a rating of the quality and relevance of your keywords and PPC ads. It is used to calculate your cost per click (CPC), which is multiplied by your maximum bid to determine your ad rank during the ad auction process. Your Quality Score is determined by several factors, including:
- Your CTR (click-through rate)
- The relevance of each keyword to its ad group
- The quality and relevance of the landing page
- Your ad text relevance
- The historical performance of your Google Ads account
The above list is the main components of the Quality Score. However, no one outside of Google knows how much each factor “weighs” in the Quality Score algorithm, but we do know that the most important component is click-through rate. When more people see and click on your ad, Google knows that your ads are relevant and helpful to users. As a result, Google rewards you with:
- Higher ad rankings
- Lower costs
Average, Low, and High Click-Through Rates
The average CTR in your Google Ads campaigns is the ratio of ad clicks to impressions. While basic CTR measures the rate of clicks on each ad, average CTR computes the number of clicks vs. impressions for your entire campaign or for each individual keyword.
A low ad CTR is problematic because it can lower your Quality Scores and impact future ad placements. Low CTRs indicate a lack of relevance for your ad viewers, who aren’t compelled to click on your ad and visit your landing page to learn more about your offer or complete the desired action.
A high average CTR, on the other hand, whether across your campaign or for a specific keyword, does not always imply success. It is one of several indicators that, when combined with other KPIs (key performance indicators), can help you determine the success of your campaign. High average CTRs with low conversions, on the other hand, may indicate that you’re wasting money by attracting people who are less likely to convert. This could be due to overly broad targeting, irrelevant ad copy, or a combination of the two.
What’s A “Good” Click-Through Rate?
In the world of small business digital marketing, the question of what is a good CTR is a hot topic that is debated often.
Unfortunately, the general answer is “it depends.” This is because CTRs naturally vary from keyword to keyword and campaign to campaign. Everything involved in how your ad is displayed plays a part, from your ad copy to the ad’s ranking on the results page.
So, while a “high” CTR is desirable, there is no magic number. The average CTR varies by industry (more on this below), and your expected CTR is determined by the position of your ad, among other factors.
However, in general, the average CTR of a Google Ad on the search engine results pages (SERPs) is about 2%. As a good rule of thumb, you should shoot for a 4-5% CTR on the SERPs.
However, it is important to note that average CTR and other key metrics such as conversion rate can vary considerably by industry, as some industries are more competitive than others. Looking at industry-specific benchmarks is the best way to determine whether your CTR is higher or lower than average.
Google Ads Average Click Through Rate (CTR) Search Network
When Higher Click-Through Rates Are Bad for Small Businesses
If a keyword isn’t relevant to your small business or isn’t going to generate sales, bring in more leads, etc., then a high click-through rate for that term is bad for small businesses.
Look at it this way:
- You are paying for every single click
- All those clicks will generate a lot of ad spend.
- Sometimes you generate clicks on high-priced keywords that you can’t profit from even if they convert.
- Irrelevant clicks and terms are just spending money without bringing in additional business.
Therefore, you don’t always want higher click-through rates; instead, you want high CTRs on keywords that are:
- Relevant: They have to do with your ad text, landing page, and offers.
- Affordable: These keywords are the ones that aren’t going to be profit-prohibitive.
The Challenge of Online Ad Viewability
(Source: Hootsuite)
Advertisers should also consider ad viewability when evaluating ad effectiveness measured by click-through rates. Ad blocking can and has a huge impact as well, as it has grown in popularity across countries and demographics, accounting for 42.7% of internet users using ad blockers. It is as high as 56.8% in Indonesia, but only 38.8% in the U.S.
Here’s a list of 14 countries that should be most interesting to our typical clients that Hootsuite analyzed.
2021 Ad blocking by 14 popular countries
(Source: Hootsuite)
See the full list of all 46 countries that Hootsuite analyzed here.
Final Thoughts
Hopefully you have found this article helpful and that I have in some way helped you to understand what a click-through rate is, what Google Quality Scoring is and how it affects your CTR, showed you the challenges of online ads, and answered the ultimate question of what is an average click-through rate.
If you need help with a PPC ad campaign and Google Ads, then reach out to me. I am here to help you and your small business develop a Pay-Per-Click campaign and landing pages that will bring you in a ton of qualified leads, contact me today!
