Why CTR is not the most important metric for business in Paid Traffic

Hi everybody! Today we will talk about CTR and its importance in terms of E-commerce in Facebook ads as well as in every paid traffic channel.

Recently, during paid consultations, ad accounts audits, etc. we see that a lot of media buyers and business owners always try to increase the CTR. They turn off profitable campaigns because they think that CTR is too low, try to run Traffic ads to increase it, switch audiences, products, and creatives too early, and so on.

But is CTR really that important, or is it worth paying attention to other metrics? In this article, I’ll try to explain everything to you based on many years of experience in the E-commerce niche. And let’s start with terminology!

What is CTR?

I think that most of you know, what this abbreviation means, but for those who don’t I’ll explain.

CTR - Click Through Rate

In simple terms, this metric shows in percentage how many users who saw your ad clicked on it.

But sometimes, some people get a little bit confused because Facebook, in its interface, has 2 types of CTR and because of that they can’t draw the right conclusions and make data-based decisions. So, here are they:

• CTR (link click-through rate)

• CTR (all)

What are the differences?

It’s quite easy. Here is the formula for calculating CTR (link click-through rate):

• CTR (link click-through rate) = Link Clicks / Impressions * 100%

And here is the CTR (all) formula:

• CTR (all) = Clicks (all) / Impressions * 100%

Do you see the difference? So, to calculate each type of CTR, we use different “Click” metrics.

Link clicks - shows the number of clicks on links within the ad that led to advertiser-specified destinations

Clicks (all) - counts multiple types of clicks on your ad, including certain types of interactions with the ad container, links to other destinations, and links to expanded ad experiences. It includes:

• Link clicks

• Clicks to the associated business Page profile or profile picture

• Post reactions (such as likes or loves)

• Comments or shares

• Clicks to expand media (such as photos) to full screen

• Clicks to take actions identified as your campaign objective (such as liking your Page for a Page engagement campaign)

As you can see, these two metrics are considered completely different and carry different meanings.

In most cases, we use only CTR (link click-through rate) in our work, especially when working with E-commerce. Of course, likes, comments, visiting page profiles, etc are important sometimes, but here we need to understand the conversion rate from ad view to a website link click and nothing else. And to avoid misunderstandings, when we use the term “CTR”, we mean CTR (link click-through rate)

I think that we’re done with terminology, and we can now move on!

What’s wrong with CTR in E-commerce?

Now, let’s talk about CTR in the E-commerce niche, and here I’d like to explain why CTR is not the metric that you, me, or anybody else should pray for =D

Truly speaking, the explanation is quite easy. And I’d like to start with such a statement:

If you run Facebook ads in order to get sales, the metric you should pray for is your ROAS and nothing else.

It may sound strange, and I guess that now you have some questions like, what about CPC, CPA, CPM, Reach, Frequency, and, of course, CTR, aren’t these metrics important?

Look, of course, each of the existing metrics is important in its own way and can affect the effectiveness of your ad campaign.

But, think about whether it makes any difference to you that your advertising campaign has a CTR of 0.2%, but at the same time, you have x5 ROAS, for example.

Now you can think of something like that:

Okey, but if I make the CTR in my campaign not 0.2%, but 1%, then my ROAS will not be x5, but x10.

And here I have to upset you, because these calculations work only in a vacuum, but not in real life.

High CTR means that more people click on your ads, but it doesn’t mean that these users are your potential clients and will buy anything. You should not try to increase your CTR, you should increase your ROAS if it is unsatisfactory and your CTR may change in the process.

That’s why we always establish some KPI to understand whether we have to improve our ROAS or it’s fine, and we could start scaling up (about KPI, we are going to talk in detail in future articles).

If your ROAS is fine, then forget about your CTR, CPC, cost per ATC, PV, etc. It’s simply doesn’t matter while the ROAS satisfies you and you can just start scaling up (vertical or horizontal).

BUT if your ROAS is not high enough and your ad campaign is not profitable right now, then, you should try to test different audiences, creatives, different types of copy and special offers, play with your landing page, product photos and description and try to find some problems and an approach which will make your ad campaign profitable (Or you can hire us and we will be pleased to help you =D)

You see, exactly PROFITABLE, not with high CTR or low CPC, just profitable.

To back up my words, I will give a real case (it’s a result of the second month of work, during the first one we tested a lot):

Here it is. As you can see, we’ve got a ROAS of x6.74 with a CTR of 0.38%. We’ve been totally satisfied with this result, as well as our client (The KPI for ROAS was x4). And during tests, we’ve tried to increase our CTR by using pretty designer creatives, and here are the results:

Designer creatives:

Our creatives:

Yes, designer creatives had higher CTR, but as far as our main metric is ROAS, we continued to work with our ad creatives. If you are interested in this case, you could get acquainted with the full version of it on our website: https://vend.agency/cases/2

When is it worth paying attention to CTR?

So, I hope now you understand that CTR is not the most important metric in E-commerce, but let's still look at cases where it can be important.

1. During the first tests on a new project launch When you're trying to launch a new product, or it's the first launch of your life, and you don't know what to expect, you can look at your CTR in the first hours or days of an ad campaign as a secondary metric that will guide you a bit in performance. For example, if it’s 0.1% for 2 days, you’ve spent AOVx2 and got ROAS x1.4, something is definitely wrong.

2. Ad campaign optimization If your current advertising campaign does not bring a high enough ROAS (for example, your KPI is x3, and now you have x2), then you can look at your CTR. On average, in the E-comm vertical, a good CTR is around 1%, depending on the product. It depends on many metrics, but sometimes you can try to increase CTR through text editing, creative, or finding an audience that will be more responsive and thanks to better communication, you will get both a higher CTR and a higher ROAS.

3. Traffic campaigns We use them when we need to advertise Instagram page of a brand or attract some users on a “Blog” page, for example, and then use this audience in retarget campaigns As far as Traffic campaigns have no optimization vector instead of clicks, here we can only analyze CTR and CPC. But, truly speaking, even here, we should look at CTR in relation to subscriber growth or, if it is a blog advertising campaign, then in relation to time spent on the site or scroll depth.

Conclusion

In conclusion, I’d like to say that you always have to follow this plan:

1. Find out the main purpose of your campaign (Purchases, Followers, Blog visitors, etc)

2. Establish KPI based on the goal of the advertising campaign (Purchases - ROAS, Followers - cost per follower, etc)

3. Try to test and achieve your KPI

4. When our KPI is achieved, stop chasing a higher score and start scaling

I hope this article helped you understand what metrics to focus on and what to strive for in your ad campaigns. If you have any questions, fill up the form below and book our first call! Good luck with your launches, and see you soon!