How Is Your Online Ad Performing? Understanding and Evaluating Click-Through Rates

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Click-through rate or CTR is a way of measuring the success of an online advertising campaign. A CTR is obtained by dividing the "number of users who clicked on an ad" on a web page by the "number of times the ad was delivered" (impressions).

For example, if a banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1 percent.

Banner ad click-through rates have fallen over time; when they first started to appear, it was not uncommon to have rates above 5.0 percent. They have fallen since then, currently averaging closer to 0.2 or 0.3 percent [Stern, Andrew (February 1, 2010). "8 ways to improve your click-through rate". iMedia Connection].

In most cases, a 2% click-through rate would be considered very successful, though the exact number is hotly debated and would vary depending on the situation. The average click-through rate of 3% in the 1990s declined to 0.28% by 2003 [Li, Hairong; Leckenby, John D. (2004). "Internet Advertising Formats and Effectiveness". Center for Interactive Advertising.]

Official industry statistics on average click-through rates do not exist as CTR is highly subject to creative effectiveness, which is very campaign specific. However, below are some benchmarks gathered from various sources.

AVERAGE BANNER RESPONSE RATES: Between 0.10%-0.13%
• For 2008, average Click-through in the United States was 0.10% for banners [DoubleClick, Benchmark Report, 2009]
• Average click through rates have almost halved since 2004, UK click through rates are averaging 0.13% [ADTECH via Association of Online Publishers, 2009 ]
• Click-through rates on banners have declined from 0.33% to 0.19% from 2004 through 2008. This decline has been particularly difficult for marketers struggling to drive ROI in a tough economy. One major contributor is the rise in clutter, i.e., the number of ads a consumer sees online in a given day. [Forrester, Go Big or Go Home Advertising, 2009]
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According to Forrester Research, much of this decline may be due to oversaturation with online users seeing more than 1,800 online ads per day, an increase of more than 250% since 2004.

Paradoxically, one of the major underlying reasons for the decline in CTR is the success of online display advertising and the exponential increase in the number of banners that users are exposed to. MediaMind found that users who are exposed to relatively few ads are more likely to have a high CTR as compared to users who are exposed to a high number of ads. The decline in CTR happens even though in absolute terms, users who are exposed to a high number of ads click more.

Average Internet ad click-through and interaction rates
Display ads are renowned for low click-through rates as this compilation of display ad click-through rates from across the UK and Europe shows. Display ads only gain around 1 click every 1000 impressions. A review of interaction rates shows that there is a greater degree of interaction depending on format.

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Variation in online ad Click-through rates by country
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Banner ads are somewhat more effective in some countries, particularly Asia-Pacific, but as you would expect, figures for the most part are similar across the board.

Variation in online ad Click-through Rates by ad format
Ad click-through rate naturally varies according to placement (position on screen) and ad format (shape and size). The traditional full-banner performs very poorly compared to skyscrapers, the ubiquitous medium rectangle and the newer large rectangle format.

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Variation in online ad Interaction Rates by ad format
Interaction rates differ for different ad formats in a similar way to ad formats.

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Interaction rate definition:
Interactions are defined as the user does one or more of the following:
• Mouses over the ad for 1 continuous second
• Clicks an Exit link
• Makes the ad display in Full Screen mode
• Expands the ad

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