This is a question we get asked often. The answer depends on two things: 1) what you paid for the impressions that generated the clicks and 2) what cost per click to have to generate to secure your target cost per sale. Let’s say you get a 0.05% CTR. That looks low. Now lets imagine you have a target cost per click of £1. If your click through rate is 0.05%, then you are generating 1 click with every 2,000 impressions. This means that to reach your target CPC you must buy your 2,000 impression for no more than £1. If your CPM rate is £0.50, then your impressions cost will be £1. So, the 0.05% click through rate is giving you your target cost per click. But if you are paying a £10 CPM, then the 2,000 impressions you need for every click will be costing £20 – then your CTR of 0.05% is terrible.
What can you do to improve things? There are three things you can do 1) negotiate down the CPM on the basis of performance or 2) improve the nature of the offer e.g. 5% off list prices will pull less well than an offer 20% off list prices and 3) improve the creative – the message or call to action may not be strong enough – beef these up and your click rates could climb significantly.
