Measuring KPIs In Google Adwords

The Numbers You MUST Know To Make Money On PPC

As the title suggests, measuring KPIs (key performance indicators) needs to be a priority throughout the running of your PPC campaigns. These numbers can instantly inform you about what you’re doing right and what needs to be improved. Acting on this can make or break your campaign.

But what if you’re new to Google Adwords and aren’t certain which key performance indicators to measure, or how to smoothly manage your budget? Read on to find out exactly which numbers to focus on – and watch the money come in.

Before we go into detail, you should know exactly what a KPI is. KPIs in Adwords are: 

The quantifiable measures in the campaign metrics that are used to gauge performance, in terms of money or goals.

Your most important KPIs depend on your specific Adwords strategies.

Any user of Google Adwords will know that there is an overwhelming amount of KPI metrics to keep an eye on in your PPC campaign. In particular, small to medium sized business owners don’t always have the time to make sense of it all and separate out the numbers that will really add value.

Many Adwords experts have debated over which Adwords KPIs you should be measuring the closest, by asking themselves:

1. Which PPC metrics give the clearest picture of campaign performance?
2. Which PPC metrics could you do without/are overrated?
3. Which measurements enhance Google Adwords budgeting the most?

These are the most popular key performance indicator choices that deliver the most impressive returns:

CTR

CTR (click through rate) is one of the most crucial KPI metrics in PPC. It is measured as a percentage, where any figure over 2% is good, and indicates the quality of your ads. It is measured using the sum: total clicks ÷ ad impressions.

If CTR for a particular ad is low, you know which ad content, keywords and landing pages to investigate. By improving match relevance and the clarity of your offer, you will drive more valuable traffic and increase CTR. Your budget spend on clicks will also be much better.

To find out how your website can attract more valuable leads, check out 10 Steps To An Effective Website That Attracts Enquiries & Sales.

Conversion Rate

This particular PPC metric is not only a KPI of conversions and sales, but a KPI of your keyword, ad and landing page quality. A conversion can be a sent enquiry, sign up for a white paper or a straightforward sale, but obviously these wouldn’t exist without a consistent, credible sales funnel.

By setting up conversion tracking goals in Google Analytics and merging them with Adwords, you can see the conversion rate percentage of any call to action. It will immediately tell you whether your keyword choices, ad wording and page layout are working or not, saving time and money.

CPA

This KPI means cost per acquisition (also known as cost per conversion). It won’t be needed if you aren’t tracking conversions. However if you are using conversion codes in Google Analytics, acting on this is a must.

Cost per acquisition lets you know – with one clear price – the average overall spend to get one conversion. If your cost is high, that means you aren’t making enough profit and wasting your PPC budget. Therefore, if you act on this figure you could increase profit, spend less of your budget and have a more efficient sales funnel with just a few campaign tweaks.

CPC

The CPC (cost per click) for each keyword in your campaign is the most basic of KPI metrics; it is so important if you want to make money on Google Adwords. When choosing which keywords to use you must consider how much you will pay for each, as well as how relevant and closely matched it is to your ad group. If not, you will narrow your ROI in the long run. Click cost is usually defined by the amount of bidder competition, how much the highest bidders are paying and how many clicks the keyword is expected to get.

When looking at the CPC, think about whether your budget will comfortably accommodate first page clicks on this keyword. Can you afford to bid competitively? Are there other ways you can improve keyword/ad/landing page quality to decrease this CPC? Weighing up the pros and cons and being realistic will ensure you make money without draining your Adwords budget.

Dig deeper into the cost factors of PPC by reading What Does Google Adwords (Pay Per Click) Cost? The Main Factors.

Quality Score

Finally, Quality Score (QS) is another essential number to keep tabs on in your Adwords PPC account. Quality Score is the score (0 being low, 10 being high) assigned to all keywords in your campaign. It tells you, plain and simple, how good the “quality” of your keyword is in relation to its ads and landing page. This particular PPC metric may not tell you about cost implications, but it definitely indicates how much work is needed on specific areas of your campaign to increase profit.

Google Adwords will reward you kindly for optimising Quality Scores. The higher the number, the lower you will have to pay per click for the same (or better) ad position. This means you will save money on CPC and increase profit, getting more ad exposure at the same time!

So now you know which KPI metrics should be getting your full attention every time you log into your Google Adwords account.  Measure these numbers regularly and you are guaranteed to operate a profitable PPC campaign. 

Article by Laura Wootton

Additional Resources

http://www.buzzmaven.com/services/paid-search-marketing/google-adwords-targeting/google-adwords-tips/kpi

http://www.wordstream.com/blog/ws/2011/09/20/ppc-metrics-ultimate-guide