Welcome to the latest edition of our new weekly blog series, Marketing Definitions. Each week, we will identify an oft-used term or phrase in the marketing community and break down its use and meaning for the broader population.

Last week’s term that we defined was ROI.

Today’s Term = Click-through Rate

You will most often hear marketers talking about click-through rate, or click thru rate, or CTR, when talking about online advertising.

Because most ads that we place online are designed to be clicked on, one of the first metrics we look at are clicks. How many clicks did a particular ad generate?

But clicks alone are not enough, because they don’t take into account how many people saw the ad. So that’s when we look at click-through rate. The click-through rate tells us the percentage of people who saw the ad that then clicked on it. It’s an initial measurement of ad effectiveness. Did the ad get them to click or not? And we can compare the CTR of one ad against all others to determine which is most effective.

To calculate click-thru rate, we simply take the number of clicks and divide it by the number of impressions (the number of times the ad was viewed).

Let’s say a banner ad generates 10,000 impressions. We are able to see that 200 people clicked on the ad. That ad would have a CTR of 2%.

In addition to ads, click-through rate is an important metric we measure in email marketing. There, the definition is the same, except that instead of impressions, we divide the number of clicks by the number of people who received an email.

Therefore, if we sent the email to 1,000 people, and 100 of them clicked on a link in the email, that email had a CTR of 10%.

That does it for today’s definition. Have a term you’d like defined in a future post? Email us or post it in the comments below.