Click-Through Rate (CTR)

DEFINITION of 'Click-Through Rate (CTR)'

The percentage of individuals viewing a web page who click on a specific advertisement that appears on the page. Click-through rate measures how successful an ad has been in capturing users' interest. The higher the click-through rate, the more successful the ad has been in generating interest. A high click-through rate can help a website owner support the site through advertising dollars. Because Internet users have become desensitized to ads on web pages, a typical click-through rate is only about two to three users per 1,000.

BREAKING DOWN 'Click-Through Rate (CTR)'

A high click through rate means that lots of users are clicking on an ad, but it doesn't tell us anything about the number of sales the ad ultimately generates. For this reason, conversion rate, the percentage of click-throughs that lead to actual sales, may be a more useful metric of an ad campaign's success.

RELATED TERMS
  1. Cost Per Click - CPC

    A website that uses CPCs would bill by the number of times a ...
  2. Impression

    A metric used to quantify the display of an advertisement on ...
  3. Ad Blocking Software

    Ad blocking software removes advertisements from websites. Some ...
  4. Click Fraud

    Click fraud is the act of illegally clicking on pay-per-click ...
  5. Media Buy

    The purchase of advertising from a media company such as a television ...
  6. Viral Marketing

    Internet advertising or marketing that spreads exponentially ...
Related Articles
  1. Financial Advisor Technology

    Tapping YouTube to Grow Your Advisory Firm

    Navigating YouTube to market your firm can add up to new clients. Here are some tips to incorporate this under-appreciated medium into your marketing.
  2. Stock Analysis

    Why Facebook Is Free to Use (FB)

    Learn why Facebook is free to users, and understand how the company makes more money by charging advertisers than it would if it charged users.
  3. Investing

    Ad Blockers Could Spell A Boom For Publishers  

    In a free content world, largely subsidized by advertising, ad blockers can eat into publishing revenues. But, publishers can still stand to gain.
  4. Investing

    How Baidu Makes Money

    China's largest search engine, Baidu makes a lot of money, the majority of which comes from a growing customer base for its online marketing services.
  5. Financial Advisors

    How Financial Advisors Can Tweet Like Pros

    A quick guide to how advisors can tweet like the elite.
  6. Investing

    Trends And Growth In The Digital Advertising Industry

    The rapidly expanding digital advertising industry is leading a shift towards content and demanding forced innovation.
  7. Professionals

    This Is How Adblocker Hurts Your Favorite Websites

    Using Adblocker to block ads on your favorite sites? Reconsider your decision as it may eventually backfire.
  8. Investing

    Maximize Your Ad Potential From Facebook Trends

    Facebook's "Trending" is a hot destination for users and soon maybe advertisers. We look at what business can get from advertising based on these trends.
  9. Stock Analysis

    Why Facebook Will Never Charge User Fees (FB)

    Understand why Facebook is unlikely to ever charge users; the site's business model of leveraging free users to charge advertisers is highly profitable.
  10. Fundamental Analysis

    Google Ads Vs. Facebook Ads

    Universal access to the internet through smartphones, tablets and computers has driven the success of numerous companies. Most notably, Google and Facebook have witnessed staggering growth as ...
RELATED FAQS
  1. Why does an investor need to understand the click-through rate in the Internet sector?

    Understand what a click-through rate measures, and learn why an investor should be interested in the click-through rate of ... Read Answer >>
  2. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  3. What countries represent the largest portion of the global Internet sector?

    Learn which countries are most likely to impact the growing Internet sector based on recent user growth and largest populations ... Read Answer >>
  4. What has Larry Page's involvement in Google been?

    Learn the timeline of co-founder Larry Page's involvement with his company, Google Inc. and how his participation shifted ... Read Answer >>
  5. How did Larry Page amass his wealth? (GOOG)

    Learn how Larry Page made his fortune by turning a college project into what would become one of the most recognizable companies ... Read Answer >>
  6. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center