Google AdWords Metric guide that will help you measure success of your PPC Campaigns
When you log into Google AdWords, it’s easy to get overwhelmed. On almost every page you’ll find a new table full of data, along with a graph that charts your different Adwords metrics over a given date range. For more experienced advertisers, the robust reporting capabilities are great for digging into pay per click advertising and campaigns to make improvements.
If you want to increase your impression and get relevant people to your website you can focus on exact match rather than broad match. However, if you’re just getting started with Google AdWords, then it’s almost impossible to know where to look. In other words, how do you know which Adwords metrics are really important to review?
“Without the right marketing metrics, you are shooting in the dark. The only way to know if things are working for you or not is those metrics.” — Ian Brodie
To answer that question, we need to take a step back and look at why we’re reviewing all these Adwords metrics in the first place. Ultimately, the goal is to use the data to improve the performance of your advertising campaigns and to make your ad campaigns more appealing and make it the most successful ad campaigns across all your networks. To use Google AdWords more effectively, it’s important to understand the business goals you’re trying to achieve and the data that’s most relevant to those goals. Below we’ll go over different Adwords metrics to focus on based on your goals. Google Adwords Metric is an integral part of client report.
I. Measuring Website Traffic
If your main advertising goal is to drive traffic to your website, try focusing on increasing your clicks and clickthrough rate (CTR). You’ll want to start by creating great ad text and choosing strong keywords so your ads are relevant and compelling to your customers.
When prospects search on Google, then they scan the results quickly and decide which one to click on. That means if you don’t have compelling ad copy, then your prospects are going to click on your competitors’ ads instead of your ads. Here are some important things you can measure to help you track and improve a campaign focused on traffic:
A. Clicks and clickthrough rate (CTR):
These two Adwords metrics help you understand how many people found your ad appealing enough to actually click on it and visit your website. You can use your CTR to gauge how closely your ad matches your keywords and other targeting settings.
1. Clicks – When someone clicks your ad, like on the headline of a text ad, Google AdWords counts that as a click. Typically the more ad clicks the better as this means more people are coming to your website from the ads. Clicks can help you understand how well your ad is appealing to people who see it. Relevant, highly-targeted ads are more likely to receive clicks.
2. Click Through Rate (CTR) – Click-through rate (CTR) is one of the purest Adwords metrics and is the lifeblood of any good Google AdWords account. It is easily evaluated by dividing clicks by ad impressions. CTR can be used to help you determine the quality of your imagery, positioning, and keywords. CTR helps evaluate how well you are communicating with searchers and can help determine the relevance and effectiveness of your campaign. A high ratio of clicks to ad impressions is an indication that you are targeting the right audience with appropriate keywords and ad text, and those searchers are responding by clicking through to your site – whereas a low CTR is pointing out that there is some disconnect between you and your audience.
CTR is relative to your competition. If your competitors have a 2% CTR and your ads have a 5% CTR, then you have more compelling ads. If your competitors have a 5% CTR and you have a 2% CTR, then your ads need to be improved.
Simple enough right? Well, actually Google AdWords doesn’t tell you your competitors’ CTR. Instead, they reveal your Quality score. Every keyword in your account is assigned a Quality Score and one of the biggest factors is your CTR. Read more blogs on ADWORDS REPORTING TOOlS
3. Quality Score – Quality Score is intended to give you a general sense of the quality of your ads. The 1-10 Quality Score reported for each keyword in your account is an estimate of the quality of your ads and landing pages triggered by them. Three factors determine your Quality Score:
- Expected clickthrough rate
- Ad relevance
- Landing page experience
Even two keywords within the same Ad Group can have different Quality Scores. So, having a high Quality Score means that our systems think your ad and landing page are relevant and useful to someone looking at your ad.
A keyword, in the context of search engine optimization, is a particular word or phrase that describes the contents of a Web page and something that the user searches for and sees your ads.
You’ll want to monitor your keyword performance with the following strategies:
- Pause or remove words or phrases that aren’t working well for you and add new ones. You can use columns and segments to review your keywords’ clicks, CTR, Quality Score, and more.
- Use keyword match types to control who sees your ads. With some match types, you’ll get more ad impressions, clicks, and conversions and with others you’ll get fewer ad impressions and more narrow targeting.
- Run a keyword diagnosis to get more information about your keywords’ Quality Scores and whether they’re triggering your ads.
- Identify off-topic keywords that you’ll want to add to your negative keyword list so that it doesn’t show up again.
C. Search Terms:
Use the Search terms Adwords metrics to review the list of searches that have triggered your ad, and identify the relevant terms that are driving traffic to your website and add them as new keywords. You’ll also want to add terms that are irrelevant to your business as negative keywords so they won’t trigger your ads.
D. Impression Share:
Impression share is the number of ad impressions your ads are currently getting versus the total available ad impressions for your keywords. For example, if there are 1,000 searches for one of your keywords and your ads are displayed for 900 of those searches, then your impression share would be 90%. If your impression share is lower than 95 – 99%, then there is opportunity to get even more ad impressions. Note that you’ll likely never get 100% impression share because Google is always rotating different advertisers.
E. Avg. Position:
A statistic that describes how your ad typically ranks against other ads. This rank determines in which order ads appear on the page. The highest position is “1,” and there is no “bottom” position. An average position of 1-8 is generally on the first page of search results, 9-16 is generally on the second page, and so on. Average positions can be between two whole numbers. For example, an average position of “1.7” means that your ad usually appears in positions 1 or 2.
Your ad’s rank can change, causing its position on the page to fluctuate as well, so your average position can give you an idea of how often your ad beats other ads for the position. You can see an “Avg. Pos.” column for your ads, campaigns, and other elements, but the average position is generally most useful to look at for your keywords. By seeing how your ad typically ranks when it’s triggered by one of your keywords, you can try to influence your position by changing the keyword’s bid.
II. Measuring Conversions
To measure your results, you’ll need to make sure that you’re measuring conversions. Once you set up conversion tracking, here are some of the important statistics that can help you measure whether your campaign is successful:
The total number of all conversions made within your chosen conversion window after a Google Adwords click. It is the metric most advertisers use and is one of the important ways to track the success of your ads. It gives you the full picture of how many conversions Google AdWords drives for your business. You can also customize this according to your business goals. You can choose to count “every” or “one” conversion following an ad click for each conversion action. This allows you to count conversions based on how they bring value to your business. Or, you can choose to exclude some of your conversion actions from any automated bid strategies you might have set up.
B. Converted Clicks:
The tally of every Google AdWords click that resulted in one or more conversions within your chosen conversion window. A conversion happens when someone clicks your ad and then takes an action that you’ve defined as valuable to your business, such as an online purchase or a call to your business from a mobile phone. Conversions help you understand how much value your online ads bring to your business. In reporting terms, the change means the Conversions (One-Per-Click) will be replaced with “Converted Clicks,” and Conversions (Many-Per-Click) will be replaced by “Conversions.”Advertisers can think of the newly named columns this way:
Converted Clicks = Unique Customers.
This is “the number of clicks that convert within your chosen conversion window (typically 30 days)”. So, if a customer makes two separate purchases after clicking on an ad, they will register as one Converted Click. Read about Effective Facebook Advertisement
C. Conversion Rate:
Conversion Rate is probably the most significant metric for your business because everything else is just numbered unless you can convert ad-clicks into revenue. It is very similar to CTR. Instead of ad impressions and clicks, it focuses on how many clicks lead to conversions. CR is used to evaluate the utility of incoming PPC traffic. How many of these users that click the add will go on to complete a purchase? This avoids the pitfall of CTR in that you ultimately measure which ad brings in the highest percentage of qualified traffic. The more you turn clicks into leads, and leads into satisfied customers, the higher your conversion rate will be.
It is a great marketing performance metric for really drilling down to how your terms and ads are performing for you. You may have a great CTR, but if you aren’t converting any of those clicks, the conversion rate will help tell you that and you’ll know it’s time to optimize. Conversion rate also lets you look at the rate trend (vs. just absolute conversion number trend) which can help you compare to conversion rates from other advertising avenues – comparing to other Adwords metrics is vital in understanding how well your ppc campaigns are performing outside of just your Google Adwords silo.
D. Total Conversion Value:
Total conversion value is the sum of all conversion values for all conversions. Make sure you are assigning a value to your conversions so you know the exact return you are seeing. This value should be assigned directly in your conversion tracking code. Though you can see conversion value through your analytics, it will be preferable to view cost and conversion value, and ultimately return on ad spend, directly within one place, the Google AdWords interface. To see the above statistics and other conversion data, you can add conversion-related columns to any of the statistics tables in your account.
III. Measuring Return On Investment (ROI)
Whether you’re using Google AdWords to increase conversions such as sales, leads, downloads, you’ll want to measure your return on investment (ROI).
The ratio of your net profit to your costs. Why calculate your ROI?
You’ll learn how much money you’ve made by advertising with Google AdWords and can use that information to help you decide how to spend your budget. For example, if a certain campaign is generating a higher ROI compared to others, you can apply more of your budget to the successful campaign and less on the ones that aren’t performing as well.
Calculate your ROI
The exact method you use to calculate your ROI depends on your goals, but here’s one way to define it:
ROI = (Revenue – Cost of goods sold) / Cost of goods sold
Once you’ve started to measure conversions, customer actions that you believe are valuable, you can evaluate your ROI. You can use conversion tracking or Google Analytics to determine the profitability of a keyword or ad, and track conversion rates and cost-per-conversion. Keep in mind that the value of each conversion should be greater than the amount you spend to get that conversion.
If your business is web-based sales, you’ll need the revenue made from Google AdWords advertising (this is the conversion value that you set), costs related to your products sold, and your Google AdWords costs. You’ll want to calculate your net profit by subtracting your overall costs from your Google AdWords revenue for a given time period. Then divide your net profit by your overall costs to get your ROI for that time period. Here’s the formula:
Ratio to profit of overall costs = Revenue (measured by conversions) – overall costs/overall costs
D. Page Views, Leads, and more:
If you’re interested in calculating the ROI for a page view, lead, or other goal, you’ll use a different formula. First, you’ll want to estimate the value of the action that you’d like to measure. To calculate your ROI, you’ll subtract your overall costs from your overall revenue. Then divide your net profit by your overall advertising costs. Here’s the formula:
Advertising ROI % = (Total revenue – Total cost)/Advertising costs x 100
Are You aware of Where Your Money is Going?
Once your account is up and running (i.e. ads are showing and searchers are clicking), you’ll want to look at how well your account is performing based on the most important metric: MONEY.
A huge aspect of interpreting your Google AdWords data is determining whether or not you are taking advantage of your advertising dollars and not wasting money. You can’t expect high profits if you have high costs, so you’ll want to make sure you’re reducing the wastage throughout your account.
F. Cost Per Click (CPC) and Cost Per Acquisition (CPA):
Cost per click is the amount you pay for each click. This is important because it ultimately determines the financial success of your ppc campaigns. While cost per acquisition focuses more on how much your business pays in order to attain a conversion. Looking at both Adwords metrics will help you answer the questions as to whether or not you are making money in your account. Generally, your CPA will be higher than your CPC because not everyone who clicks your ad will go on to complete your desired action (or in other words, convert).
It’s always a good feeling knowing that people are interested in your ads and are showing that interest by clicking, but if each click is costing you more than you would pay for a fancy dinner, it’s probably not going to feel too great at the end of the day. Your return on investment (ROI) will be determined by how much you are paying for clicks, and by what kind of quality you are getting for that investment. It’s important to monitor your CPC so that you can determine if you are under- or overpaying for clicks. And it’s equally important to monitor CPA because it determines whether or not your conversions are being driven at a cost that is profitable.
CPC, of course, varies depending on the competitiveness of the industry among other things, but you still need to take into consideration whether or not you can still make money after you pay for the cost of your clicks. That’s where CPA comes into play; if you’re paying more for that potential customer than you can make off of them, then essentially you are paying for that person to be your customer. Lowering CPC can require some strategy as you want to maintain value while lowering the price you’re paying for each click.
IV. Measuring Returns on Ad Spent
Similar to return on investment, you can measure your return on ad spend (ROAS) to see how much revenue you’re generating for each dollar spent on your ppc campaigns. Measuring your return on ad spend can give you insight into how your ppc campaigns are performing and optimize them based on your revenue.
Calculate your ROAS – If you’re interested in calculating your ROAS, you’ll need to know the amount of revenue generated by your ppc campaigns and your advertising costs. Here’s the formula: ROAS % = Revenue from campaigns / advertising costs x 100
If you use conversion tracking and have set up conversion values, consider using the target return on ad spend (ROAS) flexible bidding strategy we previously mentioned. This bidding strategy can help you to maximize your conversion value, while trying to achieve an average return on ad spend equal to your target (which you’ll know if you measure and monitor your ROAS).
V. Measuring Brand Awareness
If your main goal is to raise awareness and visibility of your product, service, or cause, you’ll first choose whether you want to increase traffic to your website or encourage customers to interact with your brand. Once you establish the goals of your branding campaign, you can then measure success by monitoring ad impressions, conversions, and other statistics.Here are some important adwords metrics that can show you whether your campaign is successful:
A. Ad Impressions:
Ad impressions are the number of times your ad was displayed to a searcher audience based on matches between your campaign keywords and terms used within search queries. As a very broad statement, your ads need to be displayed in order to see any sort of performance in your account. If your ad isn’t showing, you’re not even giving searchers a chance to click anything and definitely not leading them down the road to conversions. The bottom line here is that you first need ad impressions if you’re expecting to perform well in other areas.
Ad impressions are important to track in any campaign, no matter what your goals are. But they can be especially important in branding campaigns, because they represent how many customers actually laid eyes on your ad. You might not care whether they ended up buying anything from your site, but you do want them to remember that catchy new slogan you paid big bucks to develop and share with the world. One way to really prioritize ad impressions is to create a cost-per-thousand ad impressions campaign (rather than a cost-per-click campaign). That way you’ll pay based on the number of ad impressions your ads received, rather than clicks they’ve gotten.
B. Customer Engagement:
If you’re focused on branding, you can use clickthrough rate (CTR) to measure customer engagement for Search Network ads. On the Display Network, though, user behavior is different, and CTR isn’t as helpful. That’s because customers on sites are browsing through information, not searching with keywords. The competition is high for a busy Display Network page when compared to search. It’s important to achieve a good CTR on Search Network (5% or higher) than on the Display Network. You may want to consider other measurements like conversions for Display Network ads.
Conversions can help you see whether your ads are driving branding-related visitor behavior you think is valuable, such as sign-ups or page views. After all, aren’t you curious how many people join your mailing list after watching that expensive video ad your company just created?
C. Reach and Frequency:
Reach is the number of visitors exposed to an ad. Increased reach means that an ad is exposed to more potential customers, which may lead to increased awareness. Frequency is the average number of times a visitor was exposed to an ad over a period of time.
You can view reach and frequency data by adding the “Unique cookies” and “Avg. impr. freq. per cookie” columns to your statistics table. Do select a specific time period in the drop-down menu above those columns. These columns are available on the statistics table for “All campaigns.”
Here are the AdWords metrics that can be included in your Google AdWords campaigns. These metrics will give you a thorough understanding of your ads, keywords and audience. But all these metrics might not always fit with every account. There are always exceptions and anomalies that will throw you off a bit. The most important thing to focus on is good performance based on your business goals. Even if you find that something weird is working really well in your account, don’t completely discredit that weirdness. Take advantage of any good performance. Try to dig deeper as to why something specific is working well for you.