When you are into the internet marketing industry, it is important to realize some important factors in regards to Click Through Rate (CTR) and Conversion Rate (CR). While CTR will typically get you a cheaper CPC, it is important to realize that the ads performing with the highest CTR aren’t always the best ads. CR is something to definitely pay attention to.
For example, say you are are bidding on a Facebook campaign with a max bid of $0.25 per click. Say situation A is an ad with a .11% CTR or so; with this you will most likely be paying $0.22-$0.24 per click. Say situation B is an ad with a CTR of .08%, meaning that you are most likely going to be paying the max bid of $0.25. While a few cents will make a huge difference when you scale the campaign, it is important to pay close attention to the CR. If the CR on A is 15%, while the CR on B is 25%, it may be a better deal to work more on scaling the B ads and not focusing on the A ads. If there is an offer that has a payout of $10, here is the basic breakdown for 10000 impressions for each situation:
Situation A: at a .11% CTR, that is 11 clicks. If 15% convert, that is 1.65 conversions = $16.50. The cost would be 11 clicks x $0.23 per click = $2.53. For a profit of $13.97.
Situation B: at a .08% CTR, that is 8 clicks. If 25% convert, that is 2 conversions = $20.00. The cost would be 8 clicks x $0.25 per click = $2.00. For a profit of $18.00.
It is a basic situation that can’t be overlooked. Be sure you pay attention to your conversion rates, and not just your click through rates.