We’re never going to shut up about metrics. After all, making data-driven decisions is at the center of what we do. And when it comes to your PPC campaigns, there are no excuses for not tracking key metrics. How else are you going to earn that 200% average ROI PPC advertising is known for?
As you’re mapping out your PPC campaign this year, stay on track with this PPC metrics guide and checklist. It can get pretty overwhelming navigating through the PPC world. Our words of advice? Stay rooted in data and all will be well.
Your 6-Point PPC Metrics Checklist
If you’ve read our guide to PPC, you know that PPC campaigns can produce fast and profitable results. So how do you know whether your strategy is working and reeling in the results your team wants?
Here are six key metrics that’ll help you assess the effectiveness of your PPC campaign. Each section:
- Defines the metric
- Explains why the metric matters
- Discusses how to assess the effectiveness of the metric with some insights on relevant industry standards
Clicks refer to the number of times users click on your ads.
Clicks are the simplest and commonly used metric to identify your performing ads vs. non-performing ads. In other words, clicks indicate how effective your PPC ads are. If a particular ad resonates with your target audience, they’ll feel compelled to click on it. Otherwise, they’ll simply skim over it and continue scrolling down the webpage.
PPC platforms like Google Ads keep track of the number of clicks your ads receive, so you can easily see those in your account.
2. Click-Through Rate (CTR)
CTR, or click-through rate is the percentage of impressions (how many people see your ad) that result in a click. It’s calculated by dividing the number of clicks by impressions.
CTR = # of clicks / # of impressions
So if you have 4 clicks and 100 impressions, your CTR would be 4%.
Your CTR illustrates how enticing your ad is. And if you’re doing search ads, it can indicate how well the keywords align with the ad and the user’s search intent.
CTR also plays a vital role in your Quality Score—a score given on a scale of 1-10 that reflects the quality of your ad compared to your competitors. This score ultimately determines your Ad Rank—a value that determines your ad position. The higher the Ad Rank, the higher the position your ad will show on search results.
You can see your CTR in your PPC platform. What’s considered a good CTR depends on the industry you’re in and how competitive it is. But here are some industry benchmarks from Wordstream you can compare your rates against to see how well your Google search and display ads (GDN) are doing:
3. Conversion Rate
Conversion rate is the average number of clicks that actually convert, or take the action you want them to take. This action can be anything like purchasing a product, signing up for a newsletter, or downloading a guide.
Conversion rate is a good metric that indicates how successful your PPC ads are. So if your conversion rate isn’t very high, it might just be time to optimize your ads.
You can also compare your PPC conversion rate to the conversion rates of your other marketing campaigns—this comparison can help you identify which channels are reeling in the most conversions. Knowing this can help your team reprioritize strategies and map out your budget more wisely.
Google Ads allows you to easily track conversions. You’ll be required to:
- Select the specific type of conversion you want to monitor. Again, this can be purchases, specific actions on your website, and more.
- Set a value for each conversion. For example, if you’re tracking purchases, you’ll want to add in a transactional value. If you’re tracking newsletter sign-ups you can set a fixed value. Overall, the value of your conversion should reflect how much a given conversion is worth to you.
- Indicate how many conversions to count per click or interaction. For example, you can count three purchases as three conversions. If you’re tracking guide downloads, you can track multiple downloads from one user as one conversion. It’s all up to you.
Here’s a list of average conversion rates across industries for your reference:
4. Quality Score
Quality Score is a value that reflects how your ad quality compares to other advertisers. A value is assigned from a scale of 1-10. The higher the score, the better quality your ad reflects.
When Google submits your ad for auction, it evaluates your PPC ad and assigns it a Quality Score. The search engine calculates your score based on three factors:
- Expected CTR: How likely your ad will be clicked on when someone sees it
- Ad relevance: How well your ad aligns with user intent
- Landing page experience: How relevant and effective the landing page your ad leads to is
Simply put, quality matters. Quality Score is one of the factors that determine your Ad Rank.
It’s crucial you make sure to focus on user intent and experience to give your ads the best Quality Score possible. Your target audience and Google will thank you.
You can check your Quality Score in Google Ads under the Keywords panel.
Keep in mind, each of three factors—expected CTR, ad relevance, and landing page experience—that determines your Quality Score is compared with other competitors ads that show up for similar keywords over the last 90 days.
Each factor is rated as “Above average,” “Average,” or “Below Average.” You can use these ratings to make the necessary adjustments. Be sure to also check out this handy guide on five ways to use Quality Score to improve your ad performance.
5. Cost-Per-Click (CPC)
Cost-per-click (CPC) is a value that tells you the price you are paying for each click.
When it comes to Google Ads, there are two types of CPC you should be aware of:
- Max. CPC: Your max. CPC is the highest amount of money you’re willing to pay for a click. So if you set a $3 max. CPC bid, you won’t pay more than $3 each time your ad gets clicked on.
- Actual CPC: After you launch your campaign, your actual CPC will likely be lower than your max. CPC.
Your actual CPC is calculated by dividing your competitor’s AdRank (specifically, the competitor who ranks directly below you) by your Quality Score. The value is then added to .01 to get your actual CPC.
Actual CPC = Competitor AdRank / Your Quality Score + .01
Here’s a chart from SEM that paints a helpful picture of this (imagine that you are “advertiser 1”:
Your CPC is important, because if it’s too high, you’ll have difficulties reaching a healthy ROI. Clicks and costs add up quickly, so you should look at your CPC to make the right adjustments sooner rather than later.
Not to mention, your max. CPC is one of the several factors that determine your Ad Rank, so it’s an essential metric to consider.
In Google Ads, you have the option to choose between two types of bidding:
- Manual bidding: You select your bid amounts.
- Automatic bidding: You set a target average daily budget. Google Ads then automatically adjusts and sets your max. CPC for you).
Then, over the course of your campaign, you can track your actual CPC in your accounts “Avg. CPC” column.
Here are some average CPC rates across industries. How does your CPC compare?
6. Cost Per Acquisition (CPA)
Cost per acquisition (CPA), also referred to as cost per conversion, is the cost you pay to acquire a customer.
CPA is calculated by dividing the total amount you’ve spent on a PPC campaign divided by the actual number of customers you’ve acquired.
CPA = Total Ad Spend / Total Attributed Conversions
So if you’ve spent $10,000 to gain 20 customers, your CPA would be $200 per customer.
You can drive all the conversions you want, but if they aren’t being driven at a cost that’s profitable, your PPC campaign might not be performing as well as you think it is. So your CPA is a good indicator that your investments are worthwhile. Not to mention, it indicates you have the potential to boost your ROI.
In your Google Ads account, you’ll need to set up your CPA metric in the Campaign Groups panel. You have the option to establish a target CPA bidding—-the average amount you want to pay for a conversion. Google will use your target CPA to acquire as many profitable conversions.
Overall, the lower the CPA the better. A low CPA indicates you are converting at a profitable rate and receiving a good return on your ad spend.
Here are some industry standards to gauge how your CPA is doing:
Is PPC Advertising Effective?
Yes, PPC is a strategic and effective short-term strategy that can help level the playing field between you and your competitors. If you want quick and highly targeted results, PPC is worth it. But of course, short-term results only go so far.
The key is to pair your PPC strategy with a customized SEO strategy to:
The benefits of taking a holistic approach looks something like this:
- Maximizing search engine results page (SERP) coverage. Leaning into both organic and paid strategies can help you earn more positions on the SERP, boosting your visibility and brand awareness.
- Streamlining keywords across channels. Successful keywords in paid search can be applied to organic strategies. Your team can craft a more streamlined marketing strategy and further bolster your online visibility and traffic.
Partner with a Big Leap PPC Expert
That’s right, on top of our SEO team, we also have a dedicated PPC team who can take on the challenging and annoying stuff when it comes to managing your PPC campaigns. So reach out to us to learn more about what we can do for you.