If you’re running your own AdWords account then much of your success swings on measuring the right metrics. Unfortunately, there’s no single set of metrics that fits every PPC strategy (this depends on a number things), but there are some key numbers every AdWords user wants to keep a close eye on.
And today we have five of the most important metrics you’ll want to measure for just about every campaign type. These are often the most talked about metrics too, so there’s every chance you’ll have heard plenty about them before. But we want to highlight why they’re so important and maybe clear up some of the confusion around them.
#1: Cost per Conversion (CPC)
Also known as Cost per Acquisition (CPA)
Before you can understand how effective your PPC campaigns are, you’ll need to know the cost of each conversion they generate. A conversions of some sort is the goal of most campaigns and this metric tells you how much your spending on average per conversion you get. Or, more importantly, how much you’re wasting on clicks that don‘t convert.
To find out why you need to be careful with AdWords’ CPC conversions, check out this post from the guys over at Search Engine Land.
#2: Click Through Rate (CTR)
Another key performance indicator (KPI) is the click through rate (CTR) on your ads. Every time your ads show in search result that counts as an impression and a lower click through rate suggest your ads aren’t inspiring people to click. First of all, this says your ads may need improving, but also that your Quality Score could be impacted by high impressions and low click throughs.
For Google’s spin on why click through rate is important you can pay a visit to AdWords Help.
#3: Conversion Rate
Once a user clicks your ad you’re paying for that traffic and you stand to lose out unless you can convert that user. Your conversion rate shows how effective the sales funnels on your landing pages and website are at converting users after they click. Poor conversion rates suggest you need to improve your landing pages and website – or make your campaigns/ads more relevant.
For accurate conversion data you’ll need to set up conversion tracking in AdWords. You can find out how from AdWords Support or view the video below.
#4: Total Conversion Value
Similar to knowing how much a conversion will cost you on average, you also want to have a figure in mind for the average value of different conversion types. This allows you to weigh up the value against the cost and help determine how profitable your AdWords strategy is.
You can read more about conversion values and why they’re important over at AdWords Help.
#5: Return on Investment (ROI)
Speaking of profits, one of the single most important metrics in any marketing strategy is return on investment (ROI). This is a fine indicator of the overall health of your AdWords campaigns. With a strong ROI you know you’re close to maximising your return on the cost of ad spend – great. And that really is great, but it doesn’t tell you the whole story.
To see how you can calculate and measure ROI in AdWords, you can visit the AdWords Help page.
ROI is a massively important metric; make sure you figure it out and track it like a hound. But there is another, more important metric – the only one that really matters in any marketing strategy: profit. Your overall profit is the king of all metrics, but too many advertisers stop at measuring and trying to maximise ROI.
For more info on why profit is important and how it is different from ROI, take a look at this post from Designdamage.com.
Okay, so those are the key metrics we say every AdWords account manager should be measuring. There are many more you’ll want to track for your individual AdWords goals, of course, but if you see any of these are missing from your list, then you may want to have a rethink.