What metrics should I be focused on?
There are numerous performance metrics provided within your AdWords accounts. It’s easy to get overwhelmed with the overabundance of information, so we recommend pinpointing the metrics that are most important for your business’ goals. Below, we’ll provide descriptions for the most popularly tracked AdWords metrics. Focusing on these will help you to attain a clear goal of your account performance.
- Click-Through Rate (CTR): Click-through is the ratio of ad clicks to the total number of ad impressions. If your ad gets one click for every 100 impressions, that will give you a 1% CTR for that ad. CTR is a major component of Quality Score, in that it’s important for your ad to attract interest (receive clicks), and often CTR can help determine the relevance and effectiveness of your campaign. A high ratio of clicks to impressions is an indication that you are targeting the right audience with appropriate keywords and ad text, and that searchers are responding by clicking through to your site.
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CTR helps evaluate how well you are communicating with searchers. A low click through rate is a sign that either your keywords or your ad text (or both) need improvement, so start there in order to boost CTR and make sure you’re focused on relevance in order to appeal to an appropriate group of searchers based on your business offering.
- Cost Per Click (CPC): Cost per click is the actual amount you pay for each click, and is a key metric to pay attention to when considering budget and overall spend. CPC is determined by taking into consideration a variety of metrics such as competitor ad rank, your Quality Score, and the maximum price you’re willing to pay per click (maximum CPC bid). Your cost per click will also be less than or equal to your maximum bid, as it is an average of bids against a series of competitors over a period of time. CPC is based on competitiveness of keywords and can absolutely vary depending on the industry.
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Cost per click is important because it ultimately determines the financial success of your campaigns. 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. Since the overall ROI of your campaigns is determined by how much you’re paying for clicks and the quality of traffic they’re bringing in, it is important to think about cost per click in terms of both cost and value. You want to identify and target clicks that are both inexpensive and valuable.
- Cost per Conversion/Acquisition (CPA): Cost per acquisition is a metric that measures how much your business pays in order to attain a conversion. This metric will help you answer the question as to whether or not you are making money in your account. Generally, your CPA will be higher than your cost per click (CPC) because not everyone who clicks your ad will go on to convert. It is important to monitor this metric because CPA determines whether or not your conversions are being driven at a cost that is profitable. A low CPA is generally going to indicate that you’re reaching affordable and appropriate keywords and driving a strong ROI.
- Quality Score: Quality Score is one of the best measures of the health of your account. It is a measure of the quality, relevance, and performance of your pay-per-click advertising campaigns, and it has a major impact on your PPC success and profitability. Quality Score is applied to various levels within your account including overall account, campaigns, ad groups, keywords, ads, and even landing pages. Google places heavy emphasis on Quality Score because they view Quality Score as a representation of your ad’s relevance to user search queries. Google's quality rating has a powerful influence over the cost-effectiveness of your paid search campaigns, making it essential to have a good Quality Score in AdWords. Having a high Quality Score is a tremendous benefit to your AdWords campaign, as it provides you with:
- Lower costs - Google rewards advertisers with high Quality Scores by lowering their cost per click (CPC), which can subsequently lower your cost per conversion.
- More exposure - When you have high Quality Scores, your ads will display more often and in better positions. You can get more exposure, more clicks, and more conversions without having to raise your bids.
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Clik here to view.Quality Score ultimately affects the position of your ads, as well as your overall costs, because Google uses Quality Score to determine ad rankings and your cost per click. Although Quality Score can seem ambiguous, the important thing to remember is that relevance and effectiveness are both crucial to a good Quality Score because Google wants its searchers to have a good experience and find what they are searching for.
- Impression Share: Impression share is the number of impressions you’ve received divided by the estimated number of impressions you were eligible to receive. In other words, of all the times your ad was eligible to show, what percentage of that did your ad actually show? For example, if your ads appeared for half of relevant searches, you’d have an impression share of 50%.
A low impression share generally means that there is room for improvement in your campaign—perhaps your budget is too low, your keywords are not relevant or your Quality Scores are suffering. There are various components within your account that could be causing you to lose out on potential opportunities to appear before searchers. With impression share metrics, you can more easily pinpoint the reasons for lost impressions and see what percentage of your impression share was lost to poor ad rank performance or a restrictive budget in both the Search Network and Display Network.
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*Note: This metric is not available in the WordStream interface.
If you need any help understanding interpreting PPC data, please do not hesitate to reach out to your dedicated Customer Success Representative, or utilize our Chat Now feature.