Quick Answer (TL;DR)
Click-Through Rate (CTR) measures percentage of impressions that result in a click. The formula is Clicks / Impressions x 100. Industry benchmarks: Search ads: 2-5%; Display: 0.5-1%. Track this metric when optimizing ad or email campaigns.
What Is Click-Through Rate (CTR)?
Percentage of impressions that result in a click. This is one of the core metrics in the acquisition metrics category and is essential for any product team serious about data-driven decision making.
In the acquisition stage of the funnel, click-through rate (ctr) helps you understand how efficiently you are attracting potential customers. Without visibility into this metric, you risk over-spending on channels that do not convert or under-investing in channels with untapped potential.
Understanding click-through rate (ctr) in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
Clicks / Impressions x 100
How to Calculate It
Suppose you measure clicks at 500 and impressions at 2,000 in a given period:
Click-Through Rate (CTR) = 500 / 2,000 x 100 = 25%
This tells you that one quarter of the base is converting or meeting the criteria.
Benchmarks
Search ads: 2-5%; Display: 0.5-1%
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track Click-Through Rate (CTR)
When optimizing ad or email campaigns. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need acquisition indicators
Leadership or investors ask about acquisition performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact click-through rate (ctr)
You need a quantitative baseline before making a strategic decision
How to Improve
Optimize the numerator. Increase the number of users or events in clicks through better UX, clearer CTAs, and reduced friction in the conversion path.
Qualify the denominator. Ensure impressions represents the right audience. Better targeting means a higher conversion rate.
Invest in compounding channels. Organic acquisition (SEO, content marketing, community) grows over time while paid channels hit diminishing returns. Shift budget toward sustainable growth engines.
A/B test landing pages and campaigns. Small improvements in conversion rates at the top of the funnel compound into significant acquisition gains. Test headlines, CTAs, and page layouts systematically.
Track by channel and segment. Blended metrics hide underperformance. Break this metric down by acquisition channel, geography, and customer segment to find optimization opportunities.
Common Pitfalls
Ignoring sample size. Small sample sizes produce volatile rates that do not reflect true performance. Ensure you have statistically significant data before drawing conclusions or making changes.
Not attributing correctly. Multi-touch attribution is difficult, and last-click models over-credit bottom-of-funnel channels. Use a consistent attribution model and acknowledge its limitations.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
CAC Payback Period --- months to recover acquisition cost
Cost Per Click (CPC) --- average cost for each click on an ad
Customer Acquisition Cost (CAC) --- fully loaded cost to acquire a customer including sales and marketing
Cost Per Lead (CPL) --- cost to generate one qualified lead
Product Metrics Cheat Sheet --- complete reference of 100+ metrics