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Click-through rate (CTR) refers to the number of times a user clicks on a Web page advertisement compared to the total numbers of visitors viewing the ad.
Advertisers use the click-through rate to gauge interest in an advertisement. Depending on the way the ads are being sold, the CTR may also translate directly to the dollar amounts for the online publisher that is hosting the ad.
In order to measure consumers' interest in an advertised product, the click-through rate is calculated. For example, suppose that 100 visitors go to XYZ.com, which sells computer routers. On XYZ's website is a specific advertisement that shows a brand of router for sale. Of those 100 website visitors, one person clicks on the advertisement. Thus, the click-through ratio is calculated as 100 visitors divided by one click on advertisement, which equates to a 1 percent click-through rate.
Pay-per-click (PPC) is an advertising model used online in which advertisers only pay the publisher when visitors click on their advertisement. Under such a model, the higher the CTR percentage, the more revenue the online publisher will generate.