Gone are the days when magazines, radio stations, TV channels and billboards were the heart of advertising campaigns. Thanks to the meteoric rise of the Internet, businesses are now competing for clicks and impressions in Google ad campaigns instead.
But if you’ve been working in this field for quite some time now, then the math part isn’t something you look forward to. This is especially true in PPC advertising when you have to crunch up a big amount of data.
How do you convert it into something your clients and stakeholders would understand? How will that data explain how your ad campaigns are performing, and where you’re falling flat?
Explaining your PPC advertising efforts will highly depend on your understanding of PPC metrics. It’s crucial that you understand which metrics matter, and which ones are just for show. Learn more about them here to improve your Google ads performance!
What Are PPC Metrics?
Before we get to PPC metrics, let’s discuss what PPC advertising means. Also known as paid ads, pay-per-click (PPC) campaigns are a form of online advertising where advertisers pay a fee every time a user clicks on their ads.
This model is primarily based on keywords. The more relevant your keywords are, the higher the number of clicks. It can lead to a bigger profit, too.
PPC metrics, on the other hand, serve as the key performance indicators of your ad campaigns. They will determine if a campaign is contributing to your company’s marketing goals, as well as optimise your advertising efforts.
You have to understand that not all PPC metrics are equally important. There are metrics that you should prioritise to improve your PPC performance, especially if it’s on the brink of failure. Take a closer look at them below:
7 Universal PPC Metrics And How to Improve Them
Starting with impressions will help you easily understand PPC metrics. It indicates how many people have seen your ads even if they don’t click on them. You get a percentage of the potential impressions you could have possibly earned against the number of ad auctions in your ad.
Here is the formula for shared impressions:
Impression share = Impressions/Total eligible impressions
Even though some advertisers would argue that it’s a vanity metric to avoid, impressions are helpful in assessing your overall campaign. Let’s say you have over a million impressions but low clicks or conversions. What does this tell you? It means that people are not convinced enough to click on your ad.
You can do the following to increase your impressions:
- Adjust your funds – If possible, try increasing your budget. This will allow you to bid more in Google Ads auctions and gain a healthy impression share.
- Improve your keyword list – Make sure that you only use keywords that matter the most to your business! It will be more cost-effective to bid on keywords that can actually convert a searcher into a lead.
One of the most straightforward metrics you can use to evaluate your PPC campaign is the return on investment (ROI) or return on ad spend (ROAS).
ROI is an indicator if you’re making more money than you’re putting in. It calculates return ratios for your ad campaigns on a much bigger scale, including salary, design fees of display ads and other factors. To audit and enhance the ROI of your campaigns, you can reduce your cost per acquisition or boost conversion volume.
Meanwhile, ROAS is the return that you gain on your PPC expenses alone. You can calculate it by dividing the cost of an ad campaign by the profit you earned. Unlike ROI which takes every spending into account, it focuses more on your digital campaigns on the micro level.
As a general rule of thumb, you should aim for a 250% to 350% ROAS.
Cost Per Click (CPC)
Cost per click (CPC) is the average amount you pay every time your paid ad is clicked. It can be calculated by dividing your quality score by your competitor’s ad rank. Use this formula as a guide:
Your price = The ad rank of the person below you / Your quality score + $0.01
CPCs usually vary by industry, so you need to closely observe the trends.
This PPC metric is also helpful when you want to determine your maximum budget, especially when you’re working towards a conversion goal.
Moreover, CPCs depend on the quality and competitiveness of your keywords. If you notice that it’s getting higher than usual, it’s best to use longer-tail keywords for more targeted traffic. You can also raise your maximum bids to remain competitive!
Another option to consider is to improve your quality score. The higher your score, the less Google will charge you for every click. Since the platform wants to show the most relevant results to its users, this rule will truly benefit both parties.
Cost Per Conversion
Also referred to as cost per acquisition (CPA), cost per conversion works the same as CPC but with conversions. It is your actual cost paid to get a lead or a sale.
Keep in mind that the average cost for clicks and conversions may differ based on ad group and campaign. This includes your total investment, quality scores and keyword bid rate, to name a few.
What makes the cost per conversion ideal is that it can be customisable. When people hear the word ‘conversion’, they instantly think of a lead, a purchase or a phone call. However, conversion-related metrics will give you the freedom to choose what’s best for your needs.
For instance, a chat message or a video play may not equate to profit, but including these indirect conversions may have an impact on your goals.
Click-Through Rate (CTR)
Image source: https://www.wordstream.com/
The click-through rate is a measure of how often your ads are clicked on versus how often your ads are displayed. For example, if your ads were shown 2,000 times and clicked 1,000 times, you have a 50% CTR. Take a look at this formula for a better understanding:
Number of clicks / Number of impressions = CTR
This metric determines the performance of your ad copy. Does it resonate with your audience enough that they take action, or does it get a low rate of clicks?
But some experts would tell you that CTR is not an important metric because it does not generate revenue. However, this is not entirely true. Let’s say you have a high conversion rate but your click-through rate barely passes your marketing objectives. When you further improve the CTR performance, maximising conversion opportunities will be a cakewalk.
Check out these tips to enhance your CTR:
- Raise your bids – Raise your bids to rank higher, especially if you’re on manual bidding. You will likely earn users’ clicks and attention if you’re placed on top of the SERP.
- Improve your ad copy – Make your copy more appealing to convince people to click on it. A/B testing your descriptions, headlines and images will determine which type of ad attracts the most clicks for a better CTR.
- Take advantage of ad scheduling – Scheduling your ads gives you a higher CTR since it limits what times of the day your ad is displayed. Although this can lower your impressions, you will gain the most clicks in return.
The conversion rate measures how many users did what your ad copy wanted them to do. Conversion actions will typically vary by function or industry. For instance, conversion means customers making a purchase for e-commerce, or signing up for a free trial of a software service.
If you are an advertiser, then you’re probably going after conversions (leads or sales) the most. This is because the conversion rate is considered the foundation of an ROI-driven advertising campaign. If you have a subpar conversion rate, then you’re wasting your hard-earned money on clicks that aren’t converting. Working with conversion rate optimisation agency might be helpful for you.
Are the actions on your landing page accessible? Are you certain that your ad copies reach your target audience? If the answers to these questions indicate low conversion rates, here’s how you can improve them:
- Add call-to-actions (CTAs) to your ad copies – Ensure that your intentions are crystal-clear. Whether it’s ‘download our e-books’, ‘book an appointment’ or ‘create an account’, your customers should know what actions they need to take. You can also create a sense of urgency by highlighting limited promotions!
- Optimise your landing page – Just because a user clicked on your ad copy doesn’t mean it can already be counted as a conversion. That’s just one part of the equation. Your landing page will mostly do the work in converting them into paying customers. So, make sure it is optimised and mobile-friendly!
You can also consult with digital marketing agency with landing page creation services!
A quality score is a number between 1 to 10 used to indicate where your ad ranks on the search results pages. It is calculated based on the following:
- The past CTR of your keyword
- The quality of your landing page
- The relevance of your keyword to user intent
Having a higher quality score can help you outperform your competitors with higher bids. Google implements this rule to ensure that the most desired ad positions aren’t only occupied by people who can pay the highest price.
Instead, the best ad positions are given to advertisers who create the best user experience. If you consistently meet the standard, your quality score improves. You can try creating organised ad groups, sending traffic to landing pages that are rich in keywords and including an effective call-to-action.
Understanding these vital PPC metrics will provide a complete picture of your ad campaign performance. They indicate results that can further improve your business and maximise your revenues in the long run.
When you only focus on the right metric to track, you will feel less overwhelmed in making PPC reports for your stakeholders. You can turn a mountain of complicated data into a comprehensible record, stay on top of your budget and solve issues before they get worse.
If you’re planning to enter the world of PPC but don’t know where to start, don’t fret. Our team here at Roots Digital are well-attuned to the metrics that lead to success.
We have handled several PPC campaigns, and we’re more than happy to help you build a PPC success plan for your brand. For more information, visit our Google ads services page and give us a call.
What are PPC metrics?
PPC metrics are used to assess the performance of your ad campaigns. They help you know how much money you’re spending, set concrete targets and address minor issues before they become major problems.
What is the most important metric in PPC?
The most important metrics in PPC are conversion rates, click-through rates, cost per conversion, quality score, cost per click, shared impressions and ROI/ROAS.
What are the types of PPC?
The types of PPC include social media advertising, paid search marketing, display advertising and affiliate marketing, among many others.