Key performance indicators, often shortened to KPIs, are commonly used as easily measurable metrics that demonstrate how well something is working. Conversely, they're often the easiest way to tell if something isn't as effective as you'd like.
KPIs play a fundamental role in pay-per-click campaigns. They allow you to track the performance of your ads and improve them as you go. The seven KPIs listed below are the most important and demand your immediate consideration.
A click is the first stage of every conversion. This means that clicks are an early indicator of your pay-per-click campaign's efficacy. Measuring how many people have clicked on your ad is essential. If your ad isn't appealing to the target audience, you might consider changing it.
If certain ads are garnering more clicks than others, you may wish to focus on the more popular ads instead. While a high number of clicks is the first sign of a potentially successful campaign, it shouldn't be the sole factor that encourages you to think of your campaign as successful.
2. Click-Through Rate
The CTR is directly related to your number of clicks. It's the measurement of how many people actually clicked on your ad compared to the number of impressions it received. Calculating your CTR is simple. If your ad was shown to 1,000 people and ten of them clicked it, your CTR is one percent. This metric is arguably more important than your total number of clicks as it helps you gauge the effectiveness of your ad.
3. Conversion Rate
This is one of the more important KPIs that you should monitor regularly. Sure, it's great getting a lot of clicks, but your pay-per-click campaign isn't really working if none of them are converted.
Whatever action you're encouraging potential customers to take, whether it's making a phone call, filling out a form, or requesting a tailored quote, may need optimization if users aren't completing the action after clicking on your ad.
4. Cost Per Click
Cost per click tells you how much you pay when a user clicks on your ad. This number will depend on multiple elements, but it's crucial for businesses of all sizes to keep it in mind and adjust to it on an as-needed basis.
It's common for smaller businesses to try and keep expenditure to a minimum, opting for a campaign with the lowest possible cost per click, only to find that it's not effective enough. Increasing cost per click investments can change this. While it may initially have a negative impact on a business's advertising budget, it could seriously pay off in the future.
5. Cost Per Conversion
The cost per conversion KPI is the price that advertisers end up paying for each new customer they acquire. It's calculated by dividing the cost of conversions by the number of conversions. Observing this KPI is helpful when businesses want to determine if they're spending too much or too little on attracting customers.
6. Quality Score
Google utilizes a metric known as Quality Score to rank ads and it's calculated by using several factors. The three main factors that Google uses are the ad's CTR, ad relevance, and the user's experience shortly after landing on your website. Ideally, your ad should score between 7-10.
There's a range of benefits that a high-quality score can give you, including higher ad positions and a lower cost per click. This important KPI can save a business money in the long run if they adhere to the requirements.
7. Budget Attainment
Budget attainment is an important KPI and it's often overlooked in pay-per-click campaigns. This KPI provides a considerable amount of information about how everything in the campaign is managed. Failure to adhere to a campaign budget means that businesses could lose out on a lot of money.
It's often difficult for marketers to stay precisely within their budget. Sometimes they may spend over or under the predetermined budget amount. Difficulties with keeping everything consistent and accounting for innate fluctuations of pay-per-click prices are why businesses often overlook this critical KPI.
Staying Safe from Click Fraud
Find out more about click fraud and it's far-reaching effects. Click fraud can happen to any business that uses pay-per-click advertising. It's an unfortunate industry truth that people or automated scripts can manipulate ad campaigns by clicking on ads with no intent to buy the product or sign up for the service.
Thankfully, there are companies that monitor for ad fraud and help users develop solutions for better ad security. Anura is one company that provides this service, among others.
Anura specializes in technology that analyzes and reports website visitors. The company also flags any invalid or non-relevant traffic you may experience. Anura stays on top of the latest industry developments by consistently implementing new technologies. They strive to provide you with the best in-class solutions to ad fraud.