Click Through Rate

Click Through Rate, also known as CTR, refers to a number of clicks per hundred of impressions, expressed as a percentage. You can calculate click through rate by dividing the total number of clicks by the total number of impressions and multiplying the result by a hundred to get a percentage. To be specific click through rate measures immediate response to an ad, and not overall response to an ad, since some people may visit the advertiser's site at a later time as a result of seeing the ad.

Although considered as an advertisement effectiveness metric, it is only relevant to some aspects in internet marketing. Consider a CPM campaign at a flat rate $1.00 CPM, cost of displaying 1,000 ad impressions. Click through rate is extremely important to an advertiser, because it directly translates into the number of visits. At the same time click through rate is of low importance to a publisher as the publisher is compensated based on impressions and not the number of clicks. Alternatively, when the campaign is CPC-based, the publisher is compensated on the number of clicks, and not impressions. In this case click through rate is of great importance to the publisher and of low importance to the advertiser.

Generally the higher the click through rate the higher the effectiveness of advertisement no matter which party is befitting directly.