The importance of CTR - 5 reasons why you should pay attention to it. (8)
The importance of CTR - 5 reasons why you should pay attention to it.
I just saw a new thread about the importance of CTR here : http://stmforum.com/forum/showthread...CTR-Importance
Since this is a question that is asked over and over again, I decided to write yet another thread about it 
We all know what CTR is and that it is an important value. It is also important to add that high CTR doesn't equal to high ROI. In many cases, lower CTR creatives can result in higher profit. At the end of the day, it's all about how much you spend for traffic and how much money you make.
On the other hand, it would be a mistake to ignore CTR alltogether and I would like to give you 5 reasons why you should definitely pay attention to it. Some of the reasons are very obvious, some might be new to you. Let me also emphasize that the following text relates more to CPM campaigns, some parts of it are also valid for CPC bidding but I wrote it with CPM in mind.
Happy reading
1. It tells you something about your creatives : the higher the CTR the cheaper the traffic, this is pretty obvious. Although it's true that lower CTR banners will convert better than high CTR banners in many cases, there are certain limits you don't want to go under. Once the CTR is too low, you simply cannot profit if you are bidding on a CPM basis.
Let's take a look at a real life example - banner campaign, traffic sent to a LP with 30% CTR, CPM bid $0.3, offer payout $3, realistic CVR from LP clicks 10%.
From 100 clicks, 30 get to the offer which will result in 3 leads which equals to $9. At 0.3 CPM, this means I can buy 30 000 banner impressions. Since I need 100 clicks from these 30k impressions, the CTR has to be at least 0.3%. In case it is lower, it cannot turn profit and you need a better banner, because the traffic is too expensive for this funnel.
You can apply the same logic to any vertical or traffic type, once the cost per click or LP click goes over certain price limit, it is not possible to profit.
2. It tells you something about your competition : it's a common fact that the first banner impressions result in higher CTRs than the last ones. Users are more likely to click on the first few banner that they see, once they are on a site for a while, they start to ignore the banners more and more. So the first few banner impressions are more valuable not only because of the traffic quality but also because they can bring higher CTRs and lower the final CPC. I'm sure many of you have seen a scenario where increasing the bid resulted in a big jump in CTR - that's when you finally got high enough in the bidding chain to get your hands on the first few impressions per user.
In order to get the most of a traffic source, you need to learn to spot these breaking points and try to get past them whenever the bid still isn't too high for you. Once you can get there, the CVR usually improves too and the campaign becomes more stable due to the improved quality.
3. It tells you something about the spots/placements : CTR of creatives will tell you a lot about the placements you are buying traffic from. Is the CTR too low? The ads are probably burried somewhere deep below the fold, or there might be something wrong with the site - low organic traffic, something fishy going on with the traffic distribution ...
Is the CTR too high? There might be a BOT problem and it would be a good idea to run a bot test on this placement. The test didn't show anything strange? This means the banner is placed in a prime spot or the placement has awesome traffic – one way or another, off to a whitelist campaign with that spot and squeeze it as much as you can.
Did you suddenly loose CTR on a spot that has been killing it? Check point 2 again.
4. It will tell you something about your angles : split testing several angles and some are giving you high CTR on some placements, but they suck on others? And different angles perform exactly the other way around? When using a "blind" traffic network, you don't have much options to target by interest or niche, but the CTR will tell you what placements are more compatible with what angle.
In case the data speaks clearly enough, you can create whitelist campaigns based on this and target specific placements with specific type of an angle. This can be very useful when going after pockets of profit with very high ROI. Combine it with the high CTR approach in point 3 and you can reach insane ROI. The volume will be lower for sure but the returns can be awesome.
5. It will tell you something about the vertical you are pushing : testing ton's of creatives, driving the bids to the sky but you still can't get a decent CTR? You most likely try to push a vertical that this source or large placements don't respond well to.
This happens a lot with verticals that require specific audience, in case you are not able to properly target it, the CTR will be low and as such, this offer is not suitable to be pushed to broad audience. This is why broad appeal offers like speed boosters, antivirus, general sweeps ... are the most popular with blind networks.
As you can see, even tho CTR isn't the most important factor to watch when optimizing campaigns, it can tell you a lot about your campaigns. As always, nothing in this world is black or white only, you need to learn how to read between the lines and use this to your own advantage. Thanks for reading
Matej.
This is a great post, thanks!
I want to add something more specific: In natives even if you have a banner with high CTR you should periodically add new ones. For them is important the content (and new content is always appreciated). So even if you have high CTR banners always think of new ones to refresh your ad. This way you will not lose your position in the bidding chain.
Originally Posted by antuen
very good article!
always learn a lot from your stuff. this clears up a lot of questions i have been wondering about.
looking forward to your next one.
Originally Posted by vincent9
A good CTR is very important, but a high margin (profitability) is even more important. Good article though!
Thanks matuloo, great article!
one more and BIG reason for low or high CTR is the target audience.
Originally Posted by affiliaxegcohen
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