Some of you may be considering introducing a recommendation function. “Recommendation CTR” is one of the indicators that you should know because it leads to an increase in your company’s sales.
How is the CTR of a recommendation calculated? Also, what are the common values? In this article, we will explain in detail the CTR of recommendations, including this point.
[What is the recommended CTR? ]
First, let’s check the meaning and importance of the CTR of recommendations.
●Meaning of recommendation CTR
A recommendation’s CTR indicates the percentage of times users clicked on your ad compared to the number of times your ad was shown. It is an index that can be grasped whether it is clicked efficiently.
In the field of business, it can be used as an indicator to check whether the advertisement desired by the user is presented. It is an important indicator in terms of whether proposals that fit customers are being made and whether opportunities for purchases are being created.
Why is it important in marketing
Recommendation CTR is one of the important metrics in marketing. The main reason is that higher numbers lead to higher closing rates and higher purchase prices. For example, cross-selling to increase the purchase price of customers is a typical result. This will also improve business performance.
In addition, making recommendations properly indicates that we have been able to present the products and services that customers need. A high CTR is also one of the indicators that show efforts to improve customer satisfaction.
[What is the CTR calculation method and reference value? ]
It is important to know the calculation method and reference value when using the CTR of recommendations. How many values are normal? Let’s check in detail, including comparison with CTR by other marketing methods.
●Calculation formula for CTR
CTR of recommendation is calculated by the following formula. The unit of numerical value is “%”.
“Number of clicks by users” / “Number of impressions (number of times the ad was displayed on the screen)”
For example, in the situation where “everyone clicks on an ad displayed on the screen”, the CTR of the recommendation is 100%. On the other hand, if the ad is displayed but no one clicks on it, it will be 0%.
This value is sometimes referred to as the “recommendation click-through rate”.
● CTR reference value
The standard CTR for recommendations is said to be between 5% and 13%. On average, users click once every 8 to 20 clicks.
However, this value varies depending on the industry, product, business environment, etc. However, recommendations with a CTR of 10-15% are often considered good.
●Recommendation CTR is often higher than other CTRs
CTR figures are also given as a guideline when using other marketing methods. The CTR by representative methods is shown below.
|marketing method||Target CTR|
|Listing Ads (Google)||2% to 6%|
|Display Ads (Google)||0.4% to 1.1%|
|Advertising by SNS||0.4% to 1.5%|
CTR for recommendations is higher than the methods listed above. The reason for this is thought to be that the target is “customers who are interested in products and services and intend to purchase them.” It can be said that it is a powerful method that can promote efficient marketing.
[How to interpret the CTR of the recommendation? Explanation of how to read numbers】
When evaluating marketing measures, it is not desirable to make a simple judgment such as “a good situation because the CTR of recommendations is high”.
So how should we interpret it? From here, we will consider how to read the numbers from three perspectives.
● Interpret in combination with other indicators without judging by itself
The goal of business activities is to increase sales and earn more profits. Even if you can increase the CTR, there is no point in implementing measures that do not lead to profits. It is necessary to interpret this in combination with other indicators rather than jumping to conclusions such as “The CTR of recommendations has increased. Our company’s measures are working well.”
For example, if you aim to increase sales, you need to check the following indicators and interpret them comprehensively.
- Recommended purchase conversion rate
- Purchase amount per customer
- avarege price
If the CTR of the recommendation is high, but the above indicators remain low, there may be some problem with the content of the product or service. It is a situation where it is required to investigate the cause and work on improvement.
● Unsightly and inconvenient services can cause a drop in CTR
Recommendations are powerful triggers in purchasing and service contracts. On the other hand, don’t forget that the CTR value is influenced by various factors.
For example, in the following cases, even if you actively make recommendations that fit the customer, it may not lead to a CTR.
- The website is difficult to see or use
- Service is not good. Many customers have had bad experiences
- There are many negative evaluations for the service operated
If you think, “Ignore that company’s recommendation,” no matter how good the recommendation is, it will not contribute to the improvement of sales. For this reason, in addition to improving the corporate image, it is necessary to build a website that takes UX (user experience) into consideration.
● It is meaningless to forcibly increase CTR using techniques
Some of you may be thinking of using the following techniques to increase your CTR.
- Display recommended information on the screen in a way that hides the original content
- Display ads with time lag
As mentioned above, it is possible to create a screen design that is easy for readers to accidentally click.
On the other hand, the site with the above “ingenuity” brings disgust to the reader. Your CTR may go up, but the reluctant people who see your ad are unlikely to commit to a purchase or service.
For this reason, you should not have ads that induce false clicks. Using techniques to increase the apparent CTR will not only lead to an increase in profits, but will also worsen your company’s image, leading to a decline in business performance and an outflow to competitors.
[Recommendation CTR can be improved with a service that uses AI]
Recommendation CTR can be improved by using AI-powered services. The main benefits are listed below.
- Automatically analyze the actions taken by customers on the website and present recommended products
- Text as well as images can be analyzed
- Automatically A/B Test and Adopt Better Techniques
Even if the number and types of products are large, it can be said that it is an advantage to be able to make proposals that fit the customer.
[Increase your company’s sales and trust by using the recommended CTR]
Recommendation CTR is an effective metric in conducting targeted marketing. If you can properly present your products and services, your trust in your company will increase and it will also lead to increased sales. Improve your CTR, improve your business performance and expand your market share.