Nine Important PPC KPIs You Should Be Tracking
Key performance indicators (KPIs) are used across many industries as a way to measure how well something is performing. Applied to pay per click advertising (PPC), KPIs can determine how successful your campaigns were, and pinpoint areas for improvement. Here is our guide to measuring the performance of your PPC campaigns.
Every conversion starts with a click. This KPI measures how many people clicked on your ad, and if clicks are steadily increasing, this is an early indicator of campaign success. Although the success of a campaign shouldn’t be determined solely by clicks, it can provide early insights on what is working well and what might need improvement.
Click Through Rate (CTR)
The click through rate is generated by dividing the total number of clicks of your ad by the total number of impressions. This is a useful metric for measuring the performance of your campaigns, as it shows what percentage of people who saw your ad followed through to your landing pages.
Quality score is a metric created by Google which uses the expected CTR, landing page experience, ad relevance and ad format to create a score between 1 and 10. A high quality score (between 7 and 10), means you pay less to advertise with AdWords. A quality score of 6 or less means your paid ads are going to be more expensive. Quality score is an interesting metric as not only does it offer a way to measure the success of your campaign, it could also save you money.
Cost Per Click (CPC)
Cost per click measures how much an advertiser has paid for each click. It is calculated by dividing the total cost of the campaign by the number of times the ad was clicked during the campaign. A low cost per click is a good indication that your ad is performing well, as it shows more people are finding your company and visiting your landing pages.
Cost Per Conversion/Acquisition (CPA)
The average CPA is the price advertisers pay for every new customer they acquire. The CPA is determined based on your quality score, and is calculated by dividing the total cost of conversions by the total number of conversions. A low cost per conversion demonstrates that your paid search campaign is providing good return on investment.
Conversion Rate (CVR)
Conversion rate is the total clicks of your ad divided by the number of conversions as a result of your ad. PPC campaign managers often tend to optimise ads for clicks rather than conversions, but it is the conversion rate which tends to be a more reliable indicator of campaign success.
Impression Share (CPM)
Looking at number of impressions alone isn’t an indicator of success because it doesn’t identify how many people found your ad useful and relevant. Impression share, on the other hand, is a useful insight. If you have 50% impression share for a keyword, your competitors have the other 50%. If you want to increase your impression share, you are in turn decreasing the amount of times your competitors’ ads are shown.
Average position gives an indication of what position in the paid results your ad generally appears. Google uses ad rank (quality score multiplied by maximum cost per impression) to determine which ads appear in the top results, rather than automatically awarding first place to the highest bidder. Average position can provide context for your campaign reporting, but it is not very useful as a target indicator.
Use of Your Budget
Nearly all businesses set out a monthly budget for spending on PPC campaigns. Sticking closely to your budget can indicate a successful campaign, but the best results come from building a well optimised PPC campaign and increasing spending gradually. PPC campaigns will fluctuate for several reasons, so if you decide to increase your budget after initially seeing great results, your other metrics are unlikely to improve proportionately.
Seasonal fluctuations in search queries are also common, so it is important to take this into account when assigning a budget to your campaign. For example, fewer people will be searching for waterproof coats in the summer than in the winter, so a specialist outdoor clothing retailer will allocate a low budget for paid search in the summer, but ramp up spending in the autumn and winter when more people are searching for the products on offer.
When running a paid search campaign, these KPIs can provide useful insights into its effectiveness. Running PPC ads can be a confusing process, so enlist our PPC experts to guide you through running a successful campaign and measuring its performance.