When it comes to measuring your pay-per-click (PPC) program’s success, these are the top metrics to monitor.
Quick question: Are you measuring key performance indicators (KPIs) for your marketing campaigns?
If you’re unsure how your campaigns are really performing — or if you struggle to measure the effectiveness of your campaigns — it may be time to revisit your KPIs.
KPIs give your business an effective, measurable way to track your campaigns’ progress and performance. In the case of a PPC campaign, you want to be sure that you’re seeing a reasonable return on your overall investment.
By establishing PPC KPIs, you can create goals in a platform like Google Analytics that connects to your Google Ads. This way, you’ll have visibility into campaign performance and can begin sourcing accurate data right from the start.
8 important KPIs to track:
- Cost per click
- Cost per conversion
- Conversion rate
- Quality Score
- Ad quality
- Average order value
If you haven’t yet determined what you’re trying to accomplish with your campaign, here are some factors to consider.
What are PPC KPIs?
Put simply, PPC KPIs are used to gauge a campaign’s success. They can help you measure engagement, effectiveness, and profitability. The KPIs that are most important to you will depend on your specific campaign’s goals.
Without these benchmarks, optimization is merely a shot in the dark.
Why KPIs are important
KPIs help you measure and troubleshoot your advertising campaigns. You’ll get a better idea of where to make changes by evaluating key metrics.
“Understanding and tracking the proper KPIs is critical to understanding what’s working and what’s not,” says Sam Yadegar, CEO of HawkSEM.
Yadegar is a digital marketing pro with more than a decade of industry experience helping companies of all sizes grow their PPC programs. “We recommend that you focus on PPC KPIs more directly tied to the bottom line as opposed to vanity metrics,” he adds.
Once you’ve identified your main key performance indicators, you can create goals. From there, you can create a paid search marketing strategy and make actionable plans to reach them.
The first step to understanding which KPIs you should be tracking is figuring out what you want to accomplish.
What is your PPC campaign’s goal?
Typically, the goal of a PPC or paid search campaign is to raise awareness of your brand and to encourage customers to click through the ad to your website over your competitors’.
Your campaign may focus on a specific stage of the buyer’s journey or encompass specific keywords that are related to your product or service.
When determining which KPIs to track, make sure you’ve clearly defined what you’re trying to accomplish with the campaign.
For example, if you’re creating a top-of-funnel campaign to raise brand awareness or spread information about a new product or solution, you may want to focus on direct clicks more than conversions.
Pro tip: While tracking KPIs, keep in mind these indicators can flux based on factors like time of year, the competitiveness of your industry, and consumer trends. As a result, growth may not always be linear, so try to keep the big picture in mind.
Using KPIs to determine your PPC program’s success
Every industry — and every brand within that industry — has a different measure of success. A brand that has a significant marketing budget, for example, may have higher goals and be willing to spend more on a campaign.
If you sell high-dollar products or services or see a significant customer lifetime value (CLV), you may be able to spend more to acquire a single customer than if you’re a small business with relatively low-price items or a lower CLV.
When you’re first deciding on goals, consider your past marketing achievements as well as what you want this specific campaign to accomplish.
Ideally, you want to boost PPC ROI through new sales. But if your goals are more focused on raising brand awareness or bringing customers to your website, you may not see that kind of return in the early stages of your campaign.
You also don’t have to start with your final goal, as Search Engine Journal explains. Rather, you can start by raising awareness or building your email list in the hopes that the end result over time will be more sales.
Pro tip: While paying attention to performance indicators is important, you don’t want to jump the gun. Rather, remember there’s a “learning phase” with new campaigns. Try not to be too critical before campaigns have a chance to optimize — several weeks to a month or so, ideally.
Common KPIs to help track PPC campaigns
Looking at common PPC KPIs used to measure a campaign can give you a better idea of what to focus on when evaluating your digital marketing strategy.
Not only do they give you a better idea of what to focus on, but they can also provide insights into individual campaign success.
Gaining a better picture, both at the high level and deep into your campaigns, will allow you to fine-tune it. Often, this is what it takes to achieve goals and improve profits.
There are some platform-specific KPIs, like followers on social media, and then there are more general, universal ones, like average position or bounce rate. No matter what platform you’re on, you may want to consider:
Click-through rate (CTR) measures how many people clicked on your PPC ad after seeing it. You can assess CTR by taking the total number of impressions (the number of times the ad was seen) and dividing it by the number of clicks it received.
For a view to qualify as an impression, the consumer doesn’t have to take any action or interact with the ad.
However, the CTR can give you a better idea about what percentage of people you can expect to click through an ad based on the number of times it’s been seen.
2. Cost per click
The cost per click determines how much it costs you when someone clicks on your ad.
In the competitive digital ad space, particularly when it comes to specific, high-volume keywords (your SEO efforts can also help illuminate this), you may pay more per click than you would in the case of lower-frequency keywords.
However, those higher costs may be well worth it when you end up with a better overall return on your investment for critical keywords than you do for low-volume keywords.
3. Cost per conversion
As customers click through your ad, some of them will explore your site, join your mailing list, or even make a purchase. How much does it cost to convert customers through those ads?
Your cost per conversion (also known as cost per acquisition or CPA) will naturally be higher than your cost-per-click rate.
Not every customer who clicks through your ad will choose to convert, whether that means joining your list or making a purchase from your business.
Notice that your cost per conversion is higher on a specific type of campaign or based on specific keywords. You may want to consider revisiting those keywords or the elements of your campaign.
This way, you can potentially create a more effective campaign that has a higher return on investment.
4. Conversion rate
Not only do you want to know the cost per conversion, but it’s also important to know how many prospects actually convert.
If you notice your conversion rate decreasing — that is, people are clicking through the ad, but not choosing to make a purchase from your business or to sign up for your mailing list — consider why.
Is your campaign focusing on the wrong keywords? Does your landing page fail to deliver the information customers need, or not provide them with an effective call to action? Keep a close eye on your conversion rate as you consider the performance of your campaign.
Some PPC metrics tend to be more relevant to ecommerce businesses, such as return on ad spend (ROAS). Although, if you’re willing to do the math, it can also be applied to a lead gen strategy as well.
For ecommerce, return is an incredibly important metric. It helps you measure profitability. It doesn’t make sense to run a campaign that isn’t making money. If you calculate the amount of return you need to be profitable, you can use this as a measuring stick for campaign performance.
In lead generation, you’ll have to do some math to find your true return on ad spend, but if you know the average value of a new customer, it can be done.
In fact, using this metric can help you better calculate budgets and measure the true value of your PPC program. If you generate leads, but they don’t turn into customers, you’ll know you need to troubleshoot your advertising.
You can start by breaking down the campaign pieces to see where the issue is. Are your ads targeting the right audience with the right tone? Are your keywords relevant?
You may find some of your audiences, keywords, or ads may have lower ROAS, and working to improve their performance will increase your ROAS. Other times, you may need to use other strategies to achieve your goals.
Pro tip: Even if you don’t know exactly what you need to be profitable, you can still use this approach to help make intelligent management decisions. A ROAS of 1 is breakeven and a ROAS of 2 means you’ve made more than you’ve spent. If you know roughly how much you make per sale or lead, you can gain a better understanding of how well your ads are working.
Not all leads and conversion types are created equal. Our ConversionIQ platform can help with this by allowing you to assign a “lead value” based on revenue per deal, and back that into ROAS numbers – learn more about how ConversionIQ can help boost your PPC marketing program (and profits).
6. Quality Score
Quality Score is another KPI worth looking into. While this score is determined by Google, it’s based on factors like your expected CTR, ad relevance, and landing page experience.
A higher Quality Score means you could rank higher while spending less. Your scores in each area will give you an idea of where you need to improve to increase your click-through and conversion rates.
Quality Score is a breakdown of several vital metrics that will give you a much better idea of how relevant your ad and landing page are to your target audience.
Improving Quality Score will have plenty of positive effects including lowering your cost per click and raising your conversion rate.
Pro tip: While Google discloses some of the factors involved in Quality Score, it doesn’t list them all. You shouldn’t just aim for a perfect number. Instead, it should be a diagnostic tool to help you ensure your campaigns are performing optimally.
7. Ad quality
Ad quality is a newer metric. It specifically addresses the quality of Responsive Search Ads. It’s based on an evaluation of the experience users have when they view your ad.
As usual, Google doesn’t fully disclose the specific criteria on which ads are rated. However, some of those are the odds of a user contacting the ad, the relevance between ad copy and Google searches, and landing page experience.
Poor ad quality will affect many aspects of your advertising from whether or not your ad shows to where on the page it appears. It will also negatively affect your CPC and which assets can show.
8. Average order value
Average order value is another ecommerce KPI to keep an eye on. Often, the emphasis is on ROAS, but raising AOV will improve your profit-to-cost ratio.
Larger orders ensure revenue growth and ultimately lead to even higher ROAS. If you’re looking to scale your PPC advertising, you should work on this KPI.
Pro tip: When seeking to increase AOV, keep in mind you may see a decrease in conversion rate. This shouldn’t deter you. Instead, you should focus on ROAS and ROI, as these are the indicators of profitability.
How to present your success to the C-level
All of the above means nothing if the higher-ups don’t understand how your efforts fit into the bottom line. You spend your time in the weeds, but they want to know about the results. Do you know how to take data from impression share and total number of clicks to CPA and ROAS?
Rather than talking platform KPIs, frame your presentations around business goals. Explain how your numbers help to scale sales or increase revenue. Tell the story of how the performance helps the company reach its audience and convert them to customers.
The last thing you want is to pour money into a paid search program without a clear goal in mind.
Having PPC KPIs helps you measure success and better pinpoint strengths and weaknesses in your ad campaigns.
By knowing the most important PPC KPIs for your brand, you can build a solid plan to help ensure your goals are met.
This article has been updated and was originally published in July 2020.