In pay-per-click (PPC), key performance indicators play a fundamental role. They let you track the performance of your paid search ads and improve them on the run. Here are some of the KPIs your should track and why.
There is not a definitive list of PPC metrics every business should track, as they depend on both your industry benchmarks and your specific marketing goals. And, if not chosen strategically, the wrong, vanity metrics may distract you from reaching the desired campaign results.
Given these facts, you need to set clear goals during your campaign planning phase and choose the PPC metrics that match these goals. Only this way will you ensure satisfactory campaign results and increase your ROI.
Clicks are a vital indicator of your PPC campaign’s success. Simply put, people click on your ad if they consider them relevant and valuable. Based on ad clicks, many marketers decide whether to pause their campaigns or boost their bids.
However, clicks alone don’t provide you with a full insight into your campaign’s performance. That’s why measuring your Google Ads click-through rate is important. This vital PPC metric shows you how many users clicked on your ad after seeing it.
How do you calculate your CTR?
Logically, the CTR is calculated by dividing the number of clicks in a reporting period by total impressions. For example, if your ad got 1000 impressions and was clicked 150 times, then your CTR would be: (150/1000) x 100= 15%.
What's a good CTR?
Now, what do we consider a high click-through rate? Well, this depends on your industry. According to the 2018 WordStream research, the average PPC click-through rate stands at 3.17%. If we dig a bit deeper, we will see that the highest CTR belongs to dating and personal services, while technology, B2B, and consumer services have the lowest CTR.
Compared to other PPC metrics, the quality score is a bit abstract. This KPI was created by Google to know the quality and relevance of your ad content.
How do you calculate the quality score?
Now, to calculate the value of your ad, the quality score uses multiple PPC metrics, including:
What's a good quality score?
Now, the quality score is measured on a 0-10 scale, where 5 is believed to be the golden mean. A good quality score is between 7 and 10, and means that you will pay less for your AdWords campaign. If your score is lower than that, you should work on improving the quality of your ad copy and landing page.
Luckily, Google has recently updated the way they measure the quality score, letting us see our historical quality score data in AdWords (Google ads). This makes it easier for PPC marketers to understand this elusive PPC metric and track their campaign performance successfully.
An impression share is one of the simplest PPC metrics, telling you how many people saw your ad. Now, as it doesn’t require any additional activity (such as clicking on the ad), it is not an indicator of your campaign’s success.
After all, the goal of your ads is to entice a user to click on it and convert.
However, measuring your impressions adds a certain value and context to your PPC campaign. Namely, an impression share tells you where you stand, compared to your competitors. For example, if your impression share is 60%, this means that the other 40% of impressions belong to your rivals.
So, you can use this data to boost your impressions and minimize the chances of your rivals’ ads being seen.
How is the impression share calculated?
This metric is calculated by taking the number of impressions your ad received divided by the total number of impressions your ad was eligible to receive.
What's a good impression share?
The CTR cannot be observed in an isolation. Namely, if earning a single link costs you a lot, then it doesn’t pay off.
That is why calculating the cost-per-click (CPC) is critical.
You can use this PPC metric to determine how much you expect to spend each time a user clicks on your ad.
How is CPC calculated?
It's one of the easiest to calculate, quite simply put: Average cost-per-click (avg. CPC) is calculated by dividing the total cost of your clicks by the total number of clicks.
What's a good CPC?
Digital marketing stats suggest that the average CPC for Google Ads across all industries stands at $2.69. Sure, how much you will pay for a single click depends on numerous factors, such as the competitiveness of a keyword, or your ad’s quality score.
Legal industries have the highest cost per click of over $6.75, followed by consumer services sitting at $6.75. While marketers in the majority of sectors pay between $2 and $3 per click, there are also those industries that have a CPC that barely exceeds $1.
The conversion rate is one of the most significant digital marketing metrics you should track. Namely, attracting visitors to your site is just half the job done. The other half is, however, converting them into paying customers.
Unsurprisingly, this PPC metric depends on a wide array of factors. Does your ad title stand out and grab people’s attention? Is your ad copy informative and relevant to your target audience? What about your landing page experience? Are they user-friendly and optimized to deliver exceptional user experiences?
How to calculate conversion rate?
It’s important to mention that the mere notion of conversion varies across industries. For example, for online retailers, conversions equal sales. For some other businesses, these could be booked appointments. So, to calculate the conversion rate, you first need to understand what the term “conversion” means in your industry. If you’re investing in outside PPC services, it’s important to choose an agency that understands your industry and that can tailor their PPC tactics your specific business needs.
What's a good conversion rate?
This PPC metric indicates the success of your PPC campaigns and tells you whether they’re profitable or not. According to Google, the average cost per action is the price you pay for each customer you acquire via your ad.
And, they measure it based on your quality score.
How do you calculate the CPA?
CPA is relatively easy to measure. Namely, all you need to do is divide the total cost of your conversions by the number of conversions.
What's a good CPA?
Your target CPA also depends on your industry; the average CPA across different industries is $48.96, while the highest CPA goes to technology industries, hitting $133.52.
Now, the average cost per action is a simple concept. However, there is a bit more to it. Namely, apart from calculating the average CPA, you can also leverage the so-called targeted CPA when creating your campaigns. This metric lets you set bids automatically to increase your conversions, based on the CPA budget you set.
However, getting the most out of the targeted CPA is not that easy. To use it, you first need to understand different bidding tactics and set up conversion tracking.
Google has made numerous changes to its SERPs and, today, they’re not all about organic and paid results. When conducting a search, you first see ads relevant to it, then some related questions, and then the organic results.
How do you calculate the average position?
It’s also important to understand that marketers that offer the highest bid don’t always receive the top ad position. Instead, Google calculates the position of your ad based on your ad rank. And, the way you measure your ad rank is simple- by multiplying your quality score by the maximum cost per impression.
What's a good average position?
Tracking your average ad position helps you understand what the most usual position of your ads is in the SERPs. But, keep in mind that just calculating the average ad position is not enough. You need to contextualize this PPC metric and use it to improve your PPC campaigns. Namely, some marketers earn more conversions by appealing in third or even fourth position than on the first one.
What you can conclude by observing these metrics is that they cannot be observed in a vacuum. They’re constantly intertwining. For example, the quality score impacts your ad position, while your ad position further impacts your clicks and conversions. On the other hand, without getting people to take the desired action, your impressive impression share is pointless.
That’s exactly why you shouldn’t focus on improving just one metric. Instead, you need to track your metrics regularly and improve them accordingly.
Above all, when setting your PPC goals, you should remind yourself that there are no uniform rules to follow. Instead, you need to set realistic goals for your business and choose the KPIs that will help you achieve these goals.
There are numerous KPIs we didn't include in our list but could be beneficial to measure your ad campaign success and overall business performance, such as ROI (return on investment) Customer lifetime value (CLV), CPM, Total number of clicks, number of impressions, etc. Make sure to choose the ones that align with your business goals, and PPC ad campaigns.
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