Getting more clicks in the serps without users bouncing could help your site. But whether that's enough to outrank your competitor is a whole different ballgame. Your competitor may have a higher trust factor than you; or may have higher authority than your site as defined by Google's algorithm. Or your backlink profiles may typically come from sites with Pageranks of 1-4, while your competitor routinely gets do-follow links from sites with pageranks of 7 and above.
If you could engage your visitors more with them staying longer in your site, that's a GREAT thing (even without considering Google). I would strive for that.
And one other thing -- what you see as your site being #5 and your competitor as #4 may not be what everyone else is seeing. Remember, search is now personalized and what you see may be vastly different from what another person is seeing in the serps
Exactly what you said; 'popularity' of a site does play a LARGE key role in Google's ranking of websites; I'd say nearly the same amount as the content listed on a website. If you're receiving more traffic than site #4 by a modest amount, ~50-100 more unique visitors a day, it does boost your site for the keywords you're trying to rank for but it depends on how strong the other website is if you can overtake it.
If you have WAY more traffic than the other user; 500-1000 unique visitors a day that don't automatically bounce, then within the next month or three, there's a high chance of you overtaking that website and the ones above it.
Yes it does help if you have a high click through rate from searchers and they stay on your site a good amount of time. That still depends on what the sites outranking you are doing as well. If they have a good click through rate, etc. Keep building high quality links to your site at a natural pace. Make sure your site delivers a good user experience by checking quality metrics via Google analytics and great content.
It helps to also recognize what factors Google is taking into consideration for that particular serp. Is freshness a factor? Are they favoring brands for that result? Are you competing against local results? It's not as straight forward as more quality links or just quality indicators.
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Does it help my serp rank if I have a high ctr in serps and the users stay on site without bouncing?
For instance, if my link building gets me to #5 on google and I get more clicks than the #4 link and the users browse my site rather than bounce, will it help me to soon take the #4 position?
