Click-Through-Rate vs Conversion Rate
When it comes to internet marketing, there are a lot of terms and metrics thrown around that most people don’t understand. Some of these terms may be very specific to certain niches or websites, but some apply universally.
Click-Through-Rate vs. Conversion Rate: What’s the Difference?
Click-Through Rate (CTR) is defined as “the percentage of users who saw your ad and then clicked on any link in that ad.” While Click-Through-Rate may seem very similar to Conversion Rates, they are two separate metrics with different definitions. You can use an online platform like AppsFlyer to measure both.
Conversion Rate refers to the percentage of targeted users who complete the desired action on a website. This remains defined as any user who completes the desired goal set out by the webmaster, such as signing up for a newsletter, filling out a contact form, or purchasing a product.
The easiest way to represent ctr vs conversion rate would be through an analogy of real life: People come into your business store with an intent to buy a product or service you have on offer. They may or may not convert into a sale, but the number of people going into your store is analogous to CTR, and the number of actual sales is analogous to Conversion Rate.
Goods or products usually have different values to users. In this analogy, converting from a page visit to a sale (the user bought your product) would be analogous to the conversion rate of turning click-through users (people who see your ad and read it) into customers who complete some action you want them to.
Even though targeted ads will make more people click on them, it doesn’t directly correlate to having a high Conversion Rate. Since not everyone who clicks on an ad is interested in what you are advertising.
On the other hand, someone who comes into your store and makes a purchase has shown interest in your product. Or service for sure, but there’s no telling if they will come back for more. Someone who sees your ad and clicks to read it may not be interested in your product at all. But clicking on the ad is still an action that proves they remain at least partly interested. This user would probably have a higher conversion rate than someone who saw your ad but didn’t click on it.
It’s essential to measure both these metrics, but this is pretty much where the similarities end. People may see your ad and not click on it (a CTR of 0%). This doesn’t make them potential customers because they stay never interested in what you had to offer. Some people who saw your ad might even hate the product or service. You are offering and might click on the ad to express their unhappiness. This would mean that your CTR is higher than 0%, but it also means that your Conversion Rate will be very. Very low (depending on how many of the people who clicked did so out of spite).
Conversely, if you receive a high number of clicks, but only a small number of people who viewed your product. Or service actually end up converting, then that means that either the ad itself remains poorly targeted or you are offering a low-quality product or service.
Your CTR might be very high, but if your Conversion Rate is lower than 1%, then your business isn’t really doing anything to benefit from this traffic and should probably try different targeting options to see if it can improve conversions.
A well-optimized ad and a good product or service will, in general, lead to higher CTR and Conversion Rates.