Key Performance Indicators for your Google AdWords campaigns
Learn which metrics matter the most when you run a PPC campaign.
Ever felt overwhelmed by the sheer amount of data you can get from your Google AdWords campaigns?
Good news is that a few key metrics are enough to measure how your search engine adverts are performing. And, most importantly - understand whether your investment is bringing back that return.
In this post I will go through the metrics which will help you determine the success of your PPC campaign on Google AdWords.
You will find most of the metrics in a brand new Google AdWords report that Whatagraph just released.
But now let’s get to the business.
Measuring the success: it’s all about the money
Surely ad impressions, CTRs and average advert position matter.
But when it comes to deciding whether you are making any profit from your PPC, it’s ultimately about the important Cs: cost per click and conversions.
Clicks: from CTRs to CPCs
Let’s get familiar with the terms.
Clicks in Adwords show how many people clicked on your PPC advert. If you are not generating a fair amount of clicks, it’s time to review your advert copy and make it more enticing.
CTR (click through rate) shows the percentage of all people who saw your advert and clicked on it. CTR is calculated as impressions divided by clicks / 100. Average CTR varies across industries, but a general rule of thumb is to aim for >2%.
Cost per click shows how much money you are paying for a single click on your advert. CPCs will vary across different campaigns, ad sets, adverts, keywords, location, etc.
Total cost per campaign will show you how much all of the clicks have cost you already, and will help you keep a track on your budget spend.
Conversions: from CRs to conversion values
Metrics that fall into this group, together with your cost per click, are your key indicators in measuring how well the money spent on PPC is coming back to you.
After all, search engine advertising requires pretty large budgets - you want to make sure it is not wasted.
Conversions and their values will depend on the way you set it up in your Google AdWords. Data will usually be taken from the landing pages and websites your adverts are directing to.
Conversions show you a number of visits to your advert’s landing page that result in a transaction.
You will need to decide what counts as a conversion to you - a registration for a trial, a transaction resulting in increased revenue, etc, and set it up in your AdWords account.
Conversion rate shows the percentage of visitors that end up converting - either by buying a product, signing up for a trial, leaving their email address, or whatever else you decide to track and measure.
Cost per conversion is your amount of money spent on your Google AdWords campaign divided by the number of conversions. The lower it is, the better off you are.
Conversion value shows how much money your conversions generated in total. While total value is a good indicator to see how your investment is paying off, don’t forget to keep an eye on your cost per conversions.
Here’s an example for you.
Imagine you buy 5 Mini Coopers. You spend $1000 on all of them, so each costs $200. But if you spend the same amount of money and buy 2 Minis, your ‘cost per conversion’ turns out to be $500. So in total you spend the same amount of budget, but ultimately get more in the first case scenario.
All in all, when determining how well your PPC is paying off, your key metrics are cost per click and conversions those clicks are bringing.
If you are paying $4 per click and that click results in a $100 sale - high five to you! Similarly, if you’re getting a lot of clicks but they are not ending up in any conversions, it’s time to review your ad copy and your landing pages.
So, what else do you need to know?
Other metrics not to forget about
While your ultimate goal with Google AdWords is to generate quality traffic that brings you revenue, there is a number of other metrics that are also important in analysing your PPC performance.
Impressions and average position
Impressions show how many times your advert was shown in Google Search results when someone performed a search enquiry with your keyword.
If the number of your advert impressions is not picking up speed, you need to review your bids and increase them. It means a number of people offered higher bids for your keywords and your ad is simply not showing.
Average position shows your advert’s rank against competition. Generally you want to be in the first 3 positions, since anything higher usually means your advert is being pushed to the bottom of the search results page.
Again, your average position depends on how much you are willing to bid for particular keywords and your Quality Score. The more you invest, the higher in the advert list you will get.
Funnel activity shows you the change in user activity during the selected period of time.
It’s a nice graph to check when you want to get a visual view of how impressions, clicks and transactions are measuring up against each other. It’s especially useful when you are making changes to campaigns and want to spot any significant changes.
Your top AdWords performers
It’s important to measure up your AdWords elements against each other in terms of the key indicators we talked about earlier.
It helps you decide the top performers and indicates where you should be concentrating your ad spends.
You want to be comparing the performance on several levels.
Top campaigns is especially handy if you organize your campaigns by countries. This way you can easily determine which countries are performing best and move you spend where KPIs are showing best results.
Top ad groups is useful when you organize your adverts based on keyword groups. Again, best click through rates and conversions will help decide where the winner is.
Top text ads will show your best performing adverts in terms of clicks they generate, how keenly people are clicking on your adverts, and conversions they bring.
Keep an eye on click rates to determine which ad copy performs best, and on conversion metrics to see which adverts tend to bring biggest revenue stream for your business.
Similarly to text ads, your top banner ads will help determine winners for visual PPC content.
Keyword performance data aka search queries data
Keyword performance data is another important aspect to look at when optimizing your PPC campaigns.
How many clicks are the keywords generating and what click through rate they achieve? If it’s anything below 2%, you need to start optimizing your ad copy. It might be that it’s not matching the keyword, or is simply not enticing enough.
What is the conversion rate for each keyword? If it’s less than you expect, it’s time to review your landing pages. Make sure they have the keywords you are bidding for, and the promise you make with the advert copy is clearly repeated on your landing page.
How much value does each keyword bring? If one of them is performing substantially better than the others, you might want to think about putting more ad dollars towards it, and pausing the other ones.
Ready for your data?
It’s easy to get lost and confused amongst all performance metrics in your AdWords account. But when you clearly know what to look at, the game gets easier.
More importantly, you need to constantly keep an eye on the metrics so your PPC budget does not burn out.
Connecting is easy, and once you set up automated reporting, you can rest assured that key performance indicators for your AdWords campaigns will regularly reach your inbox.
If you’d rather invest in organic traffic, check out our blog post on key SEO metrics you should be measuring regularly.
Feel free to share the post and tweet us with any stat that you think should make the report!