There are many different KPIs (key performance indicators) to choose from when measuring how well your pay per click (PPC) campaign is doing. A lot of PPC managers use the same common KPIs to measure their success, including click-through rate, cost per click, total spend, and total clicks.
All of them are important, but which KPIs will really determine whether your campaign is effective? Here are five of the most important ones that can help you, along with tips on how to track them in Google Analytics.
1. Click-Through Rate (CTR)
Click-through rate tells you how many people see your PPC ad and like it enough to click on it. Calculating your CTR percentage is simple: divide the total number of clicks by the total number of ad impressions.
Keeping an eye on your CTR is crucial for measuring your ad’s impact. Generally, you want a high CTR, as that means most people that saw your ad were persuaded enough by it to to click through. Keep in mind, though, that ideal CTR percentages vary depending on your industry.
If you find that your CTR is low, take a closer look at your data. A low number of impressions could indicate that your ad simply isn’t being seen by anyone. Try adjusting your bids or targeted keywords to boost impressions.
Likewise, if impressions are high but clicks are low, you may have an issue with your ad copy. Review your text and consider running an A/B test to determine which combination of keywords, calls-to-action, and value propositions work for your ad.
Google Analytics already has CTR as a predefined metric. All you need to do is click CTR, which is under the Advertising menu, as a metric when setting up your custom report, and there you go.
2. Cost Per Acquisition (CPA)
Cost per acquisition (CPA) lets you measure how much it costs to acquire a potential lead or customer through your ads. Your CPA gives you a numerical value for how much you need to spend to get the number of customers you want. To calculate CPA, divide your total campaign cost by the total number of conversions.
When it comes to PPC campaigns, CPA goes hand in hand with ROI (return on investment). As you know, spending a lot doesn’t mean you’ll make a lot in return. CPA will show your current ad spend’s level of effectiveness. If your CPA grows too high, your ROI will drop. You may want to rethink your ad campaign or try a new one if you find your CPA continuing to rise.
For Google Analytics, you can use two different metrics for this KPI. Depending on what you consider an acquisition (e.g. a new eCommerce sale or a form fill), you have the ability to use either cost per conversions or cost per transaction. Both are located under the Advertising tab.
3. Conversion Rate
Conversion rate tells you which ad clicks are leading to conversions. As you probably know, conversions are actions that have value to your business. Conversion rate will give you a better understanding of what ads are actually leading towards your PPC goals. To calculate your conversion rate percentage, divide your total number of conversions by the total number of ad clicks.
Let’s say that you need to convert 300 new people in order to meet your sales goals. From your campaign’s results so far, you can expect to earn about 3,000 more clicks before the campaign ends. Dividing 300 conversions by 3,000 clicks gives you 0.1, or a goal of a 10% conversion rate.
You now know you need to optimize and test different parts of your campaign until you reach that 10% goal. Once you reach and maintain that, you can be confident you’ll meet your sales goals.
Finding your conversion rate on Google Analytics is easy. Navigate to the Conversions tab. Underneath it, you’ll find a metric called Goal Conversion rate. Click there for an overview.
4. Cost Per Click (CPC)
Cost per click (CPC) is pretty self-explanatory. It measures how much each click on your ad costs. Just like CPA, knowing approximately how much you need to spend on your PPC campaign to get a certain amount of clicks allows you to spend wiser and more efficiently.
Related Post: What's Really Happening Down on the Click Farm
The CPC calculation is easy. Divide the total cost of your advertising by the total number of ad clicks.
If you’re looking to increase spending but can’t decide which one of your ads to boost, CPC will most likely be a metric you want to check out. This KPI will help you make decisions if you ever need to roll back on your campaign and decide which ads are worth the money that you’re spending on them.
Again, just like CPA, you can find the CPC metric in Google Analytics under the Advertising tab.
Out of all the KPIs on this list, impressions are probably the easiest to understand. After all, there’s no calculations involved! Simply, impressions are how many people see your ad when it’s live. Impressions show you whether or not your ad is reaching the audience size that you want.
Related Post: What Is Impression Fraud and How Does It Work
If you want to spread awareness for your brand and get your name out there, rather than gain acquisitions, impressions is the metric you want to focus on. With this campaign goal, it’s more important that people see your company name than if they immediately buy from you.
Like most of the KPIs we’ve talked about, you can find your impression count under the Advertising tab in Google Analytics.
Bonus KPI: Quality Score
Google uses a metric called Quality Score to determine an advertiser’s rank on a search engine results page (SERP) and how much they pay for that space. This estimation takes into account the relevancy of your ads, keywords, and targeting metrics. A strong quality score can give you:
- Higher Ad Positions.
- Lower Cost per Clicks.
- Higher Impression Share.
- Lower Cost per Conversion.
In general, you’ll want to target a quality score between 7 and 10. The higher the quality score, the more useful Google finds your content and the more likely it is to convert.Source: MarketingProfs
Google Analytics allows you to track many different metrics that are helpful towards measuring the success of your PPC campaign. When setting up your own custom report on Google Analytics, scroll through and look at all the great options that Google’s predefined for you and figure out which ones you’ll need to determine if your PPC campaign is a success.This article was originally posted in December 2015 and has been republished with new information.