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What Is A Click-Through Rate (CTR)?

Click-Through Rate (CTR) is a key performance indicator (KPI) in digital advertising and marketing that measures the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement.

CTR Formula

CTR is commonly used to gauge the success of online advertising campaigns and the effectiveness of email marketing efforts.

CTR is calculated using the following formulaØ

CTR = (Total Clicks on a Link / Total Impressions) * 100%

The components of the CLV formula are:

  • Total Clicks on a Link which represent the number of times users have clicked on the given link, ad, or call-to-action,
  • and Total Impressions represent the number of times the link, ad, or email was viewed or served.
  • The product is multiplied by 100% to convert it into a percentage.

For example, if an ad was served 1,000 times (1,000 impressions) and 50 users clicked on it, the CTR would be (50 / 1,000) * 100% = 5%.

A higher CTR indicates that more people clicked on the link relative to the number who saw it, suggesting that the ad or email effectively captured the users' attention or interest. Conversely, a lower CTR indicates that the ad or email was less effective at driving user engagement.

CTR is a critical metric in the digital advertising world for several reasons:

  1. Effectiveness. It helps measure the effectiveness of campaigns and enables advertisers to identify which ads are performing well and which are not.
  2. Budget Optimization. It can guide decisions about where to allocate advertising spend. For example, advertisers may invest more in ads or keywords with higher CTRs.
  3. Quality Score. For search engine advertising platforms like Google Ads, CTR is a factor in determining an ad's quality score, which can influence the ad's cost and placement.
  4. Engagement. In email marketing, CTR is a primary measure of engagement, showing how effectively the email prompted users to take the desired action.

It's important to note that while CTR is a valuable metric, it should not be the sole determinant of a campaign's success. It should be evaluated with other metrics such as conversion rate, return on ad spend (ROAS), and customer lifetime value (CLV) to gain a holistic view of the campaign's performance.

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