A very popular question, but unfortunately there is no such thing as a 'good CTR'.
Since CTR depends on many different factors and variables, it's just like asking 'what's a good income' (without knowing your field of work), 'what's a good speed to drive' (without knowing the local driving rules), and 'what's a good meal to order off the menu' (without knowing your tastes, preferences, budget, and lifestyle).
So if anyone ever asks you to specify what constitutes a good CTR, here are 11 points to consider:
1. How long-tail is the keyword - longer tailed keywords generally have greater opportunity for tailored ads and generally receive a higher CTR.
2. Qualification of the keyword - the more qualified the keyword, the more specific you confident you can be that that person is searching for what you are offering, the greater your opportunity to present a tailored ad, the higher your CTR.
3. Tailoring and relevancy of your ads - the more closely your ads are tailored to the keyword, the better your can demonstrate to the searcher that you can cater for their requirements, the higher your CTR. Despite this being incredibly obvious, more than 10 years after Google AdWords began, few advertisers are doing this properly.
4. Qualification of your ad message - you may wish to qualify searchers before they click on your ad to help attract only your target audience, for example with a price or with messages such as 'businesses only' - the more your qualifying message restricts clicks, the lower your CTR.
5. Similarly, the more enticing your message, the higher your CTR. Ads which mention discounts, prices (if they are cheap / competitive), percentages, end dates etc tend to have a higher CTR than more generic messages.
6. Brand extent of the keyword - people searching for your brand will generally result in a very high CTR (often 40%+) for that keywords, whereas showing an ad for a competitor's brand will probably result in a CTR of less than 2%.
7. Amount of competition - the greater the number of ads showing for a keyword, the more choice the searcher has to click on competitor ads, the lower your CTR.
8. Quality of competitor ads - the more enticing and higher quality your competitor's ads, the lower your CTR.
9. Whether your brand name is popular, trademarked, and shows competitor ads - different countries have different trademark regulations on whether competitors can show ads for your brand terms, so all other things equal, if you are the only ad being displayed for your brand, you will likely receive a higher CTR for your brand keyword than when a Google search for your brand yields a full page of paid ads.
10. Your bid amount - all other things equal, the more you bid, the higher you show, the greater visibility your ad receives, the higher your CTR.
11. Extent to which ad extensions appear alongside your ads - since your ad extensions are shown based on the expected effect Google believes they will have on CTR (relative to competitor ads), the better your sitelinks, the more often they are likely to show, and the greater your CTR.
PPC marketing is rarely just about CTR. Remember - a high click through rate doesn't actually sell anything. Showing an ad which says 'click here for free cash' might achieve a fantastic CTR, but will probably generate negligible conversions and a shocking ROI (unless you are genuinely giving away free cash...)
CTR is therefore generally most useful when comparing like for like, for example determining which ad message styles have the best CTR, or determining whether the CTR of a keyword has changed compared to the previous month.
For most businesses, a CTR of 0.2% or a CTR of 20% makes little difference to their bottom line. Both a high and low CTR can generate favourable profits if the strategy and execution of the PPC strategy is correct. Take your focus away from CTR, and instead make ROI and profit maximisation the main focus of your campaigns.
Alan Mitchell is the founder of Calculate Marketing, helping businesses of all sizes improve their return on investment from PPC marketing with comprehensive long-tail keyword strategies and intelligent campaign analysis.