| CTR matters for a couple of important reasons - profits & relevance. Google, Facebook, Bing, etc use it directly to make more money on the same number of ad impressions. Let's suppose there are 2 advertisers - Andy who bids $1/click has 1% CTR &
Bob who bids $0.60/click has 2% CTR. When each of the ads are shown to users, Andy's will receive 1 click whereas Bob's will have twice as many clicks (every 100 times the ads are shown). The network (Google, FB, Bing, etc) will make $1.2 on Bob and $1 on Andy. That's some 20% profit right there without any special effort on the network's part while showing ads that interest more to the users. You only click something that interests you, right? As you can see Bob, who bids a lot lower makes 20% more profit to the network for the same amount of ad impressions. The second reason is relevance. One of the easiest ways to gauge it is CTR. Google, for one, places such a high importance on it that it has baked CTR right into determining how much you really pay to get that visitor in the form on Quality Scores. On Google if you increase your QS your ads start costing less and appear in better positions for the same (or lower) cost. This is simple economics at play. If you see on the individual ad performance screenshot you can see that the ad that received 0.077% CTR has highest -
- reach
- social reach
- connections
- clicks
and most important the least cost-per-click. Who wouldn't like to get all the benefits for a lower cost? |
All else equal, you actually want to pay LESS per impression, given the same number of clicks per dollar (your CPC). Of course, in any well-designed dynamic system, the prices of the auction should reflect the different probabilities of being clicked.