Using Mathematics to Calm Your Click-Thru Rate Worries

by WorkFromHome on July 31, 2011

Almost everyone who wants to make money online will have to deal with click-thru rates at some point in their business lives. A click-thru rate is a measure of what percent of the time people click on a link that you want them to click on, and is one of the most important measures for most business models for bloggers and affiliate marketers. Click-thru rates have a natural fluctuation, and this fluctuation can cause you a lot of worry and anxiety since it can scare you into thinking something has changed in your market or on your website. Here we’re going to show a way to use a concept from mathematics to calm your fears and figure out if a short-term fluctuation in your click-thru rate is something to be worried about.

The One Formula You Need to Know

In the mathematical area of statistics, there is a formula that stands out as being exceptionally useful to people who want to make money online because of its application to click-thru rates. If you know the average click-thru rate for some item, whether it’s an advertisement or any other link that you want clicked, then you can figure out what the chance is of getting a specific number of clicks over a specific number of impressions using this formula. If your sample size of impressions is S and your click-thru rate is C, then the chance of getting X clicks over the sample is:

(S choose X) * (C^X) * (1-C)^(S-X)

This looks complicated and tricky, but in reality you can set up a simple spreadsheet to do all of the math for you. The “choose” operation is another way of saying that you’re taking a combination, and the formula for doing (S choose X) in most spreadsheet programs is =COMBIN(S;X).

A Basic Example

Suppose you’re starting out with a blog that gets about 50 ad impressions on average each day, and over the sample you have so far, you expect your click-thru rate to be about 6%. With this in mind, what is the chance that you get no clicks on your ads on an average day? If we want to use the formula given above, we have to note that S = 50 since that’s how many impressions are in an average day, C = 0.06 since that is our click-thru rate, and X = 0 since we want to see what the chance is of getting zero clicks. When we put these items into a calculator or spreadsheet, we find that the chance of getting zero clicks on an average day is about 4.5%. That means that each month this blog would have one or two days where it got no clicks at all.

Lessons From This Example

A lot of people would have a minor crisis if they owned a blog with similar stats that didn’t get any clicks on one particular day. What you need to realise is that this will happen from time to time, and you can use the formula provided to figure out if some fluctuation you’re seeing in your click-thru rate is normal or not. In fact, you’re recommended to have a spreadsheet on hand that you can use to plug in your sample size and click-thru rate to see what the chances are of getting different amounts of clicks. The point of this is to be able to quickly and easily find out if what your click-thru rate is doing is normal fluctuation or is caused by something abnormal that needs to be addressed.

When you work from home, your stress level has to be very actively managed. Any time you can remove an unnecessary source of stress or without wasting time or energy, you should do it. Increased amounts of stress will not only make you feel worse, but will also lower your productivity, which decreases the amount of money you make. The goal here is to give you a tool that you can use to take some of the worry and stress out of looking at your number of clicks each day go up and down.

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