The essentials of PPC Metrics
Pay per click advertising is a great way to increase brand recognition and bring new customers into your sales funnel. But anyone with experience in PPC knows that, even though the outcomes are relatively clear, the sheer number of tracking metrics available to you can mire a campaign in obscurity.
There are only a few metrics that actually have a measurable difference on the bottom line (which is whatever stated conversion goal you have set for the campaign). The challenge is separating the wheat from the chaff and focusing on improving those metrics rather than trying to get ‘generally solid’ percentages across the board.
At Climbing Trees, working with small and medium-sized businesses on their digital marketing strategy, I’ve noticed that clients get overwhelmed with all the different metrics in a progress report. Rather than assume they want more information than less, I’ve taken the approach that sharing the most crucial metrics is best. It leaves the client with a clear impression of how their ads are performing, and helps avoid information overload that can easily turn into confusion or anxiety about the value of PPC.
Here are, in my opinion, the five most important PPC metrics to focus on in a campaign:
Cost-per-acquisition (CPA)
This number is an excellent crystallization of your inputs and outputs. It tells you how much it will cost to achieve whatever conversion goal you have set, and in particular, highlight areas where keywords or ad groups are not performing as they should. It is important to note that this is an incomplete metric, as it does not convey the value of the acquisition in terms of revenue for the business. I see it more as a lead generation metric, measuring how much it costs to achieve x number of newsletter sign-ups or x percentage of surveys filled out. Despite its limitations, CPA is definitely one of my benchmarks of success with a client campaign because it not only projects how many conversions we could get – it also informs which ads are not communicating as well with consumers and should be changed.
Profit
Yes, this might be a simplistic (or crude) metric for all you data enthusiasts out there – but simplicity is key when trying to communicate the value of digital marketing campaigns to a client. If, on the whole, your PPC efforts are not leading to more sales for the business and actually costing more than it’s bringing in, you should accept it and try to find solutions. The ultimate goal of advertising is to bring in more revenue for a company, and there is no good reason why digital marketers tend to shy away from this obligation by shrouding their work in inconsequential numbers like ‘time-on-page’ etc.
Conversion Rate
The landing page is where all your hours of research and experimentation are put to the test – and the metric used to measure the effectiveness of landing page copy is ‘conversion rate.’ If a lot of people are landing on the page, but only a fractional are converting, then it’s a clear sign the ad copy is not resonating with customers. Of course, in every failure is an opportunity to learn and improve, right? The longer you run campaigns for, the more you can tweak and refine ad copy on the landing page that resonates with the clients customers. Showing a spike in conversion rate as you refine landing page copy is both a gratifying part of the job and a clear indication of paid advertising working wonders.
“The longer you run campaigns for, the more you can tweak and refine ad copy on the landing page that resonates with the clients customers.”
Profit per Impression
If you do want to get into the thick of it, I suggest a metric like profit per impression. The origin of this metric comes from the nebulous quality of impressions, which, when looked at on their own, offer little insight into the effectiveness of the ad on customers. But with profit per impression, you can turn a nebulous impression stat into something substantive for the business owner. I like to apply it on keywords, ad groups, and campaigns.
Ad Rank
Ad Rank is an important threshold score to monitor. If your ad rank is too low, your ads will not even show up – so it is definitely one of those fundamental markers of a successful campaign. In my experience, a strong Ad Rank will naturally follow once you have narrowed down your target audience, produced a targeted bunch of ad groups and landing pages to match, put a sufficient budget into the campaign to compete for strategic keywords, and added extensions where necessary.
Conclusion
PPC campaigns are multi-purpose and multi-layered. They can also become quite expensive, with clients demanding to see outcomes without fully understanding how it all works. In order to reduce the complexity and convey the deeper value of paid search advertising for a client, it helps to focus on metrics that are easy to explain and also bring substantial gains in lead generation or sales. These are the five metrics I like to come back to when putting together a progress report. It’s not to say that other metrics (like click-through-rate) can be ignored – just that they are not the most accurate representations of performance and should not be over-emphasized.