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What determines whether an ad is good - CTR or CR?
August 18, 2020
STOCKHOLM


One of the eternal questions is what determines whether an ad is good. Is it the click-through rate (CTR), or is it the conversion rate (CR)? In this article, we will list the benefits of both of these metrics for ad testing. We know which one I think is most important - but what do you think?

Ad testing is an essential component of Advedro success.

What determines what a good ad is? Most people who work with us would probably agree that two metrics are most important to evaluate ads from the outside. These two are CTR (click-through rate) and CR (conversion rate). However, there is no consensus on which of these two is most important.

CTR vs. CR

There are pros and cons to both CTR and CR. Here we will go through some of them:

CTR

The most significant advantage of CTR is that it gives a good rating on whether the ad fulfills its purpose from the perspective of Advedro. Ads that many people click on are demonstrably relevant to those browsing our publishers' pages.

A cornerstone of Advedro is Quality Score, where CTR is a big part. It is quite logical that we at Advedro have chosen this approach. In addition to CTR, showing that the ad is appreciated by those who are browsing pages with our ads displayed, the Quality Score also factors when someone converts and makes money.

A good CTR is an ultimate proof that the ad has met what users and we at Advedro want.

CR

But the advertiser who stands for the costs, then? We also need to fulfill his wishes. This is where CR comes into the picture. In all its glory, CTR cannot be deposited at the bank (if you know what I mean), with all due respect.

However, the conversion rate shows how much an ad gives to the advertiser. An ad with a bad CR is probably not profitable for the advertiser, no matter how good the CTR is.

Why not both?

Both CTR and CR are essential in determining which ads deliver good results. To some extent, they are different sides of the same coin. So why not use both when evaluating your ads? Of course, you should. But at the same time, it is wise to know which leg you should stand on. If you optimize for both, there is a risk that it will be intermediate milk of everything. Let me take the following example:

Ad 1: CTR 5% CR 2%

Ad 2: CTR 2% CR 5%

Theoretically, these two ads give equally good results for the advertiser. If you could only change one of these two ads, which one would you choose? The one with high CTR and low CR, or the one with low CTR and high CR?

Our best argument for CTR over CR in ad testing is that you can not fully control CR with your ads. A low CR is not infrequently due to the landing page and/or the product/service you are advertising for not being attractive enough. You can not solve this even with the best of ads. On the other hand, CTR can more or less fully control based on how you optimize your ads.

You could compare it to a football club that evaluates football players based on how well they play football (CTR) and how large an audience comes to the matches (CR). Both are, of course, important for the football club. Still, the individual football player can mainly influence his performance on the football field, even if the player can partly also influence spectators' influx.

Of course, this does not mean that we think ads with bad CR are worth keeping. On the contrary, these need to be addressed - otherwise, it will be expensive! However, the solution to a bad CR is not always in the ad itself, but rather on the landing page or the offer itself.