PPC campaigns? Think of them as high-stakes poker. The key to winning at pay-per-click advertising isn't luck but mastering crucial PPC metrics: revenue, click-through rate (CTR), conversion rates, and cost per conversion. They're not just stats, they're your playbook to optimized results.
This blog guides you through the essential PPC metrics you should be tracking and optimizing, whether you’re new to advertising or have been running campaigns for years. First, we’ll start with the big players: revenue, total conversions, conversion rates, cost per conversion, and CTR. Then we’ll dig into secondary metrics—Quality Score, Impression Share, and View-Through Conversions. Then, we’ll also explore the full customer journey and how it’s tracked within PPC campaigns. Finally, we’ll wrap up with an overview of micro-conversions, audience engagement strategies, and metrics that don't really matter—vanity metrics.
Buckle up for a deep dive into PPC metrics mastery.
The first and primary metric you should be tracking is the total revenue your ad campaigns are generating. Knowing your revenue—the primary driver behind any PPC campaign—is paramount if you want to know if your ad spend is worth it. Because, revenue is the ultimate indicator of the effectiveness of your optimizations.
In ecommerce, you can track revenue via purchase tracking, which provides real-time insight into your sales performance. For service-based businesses, you may need to make smart estimates based on your historical data regarding average order value, and then connect that estimate to your campaign revenue estimates.
Monitoring this fundamental PPC metric is an absolute must to keep your finger on your campaign's pulse.
The second PPC metric you must monitor in your campaigns is your total conversions. Total conversions are the unvarnished tally of your PPC success. This crucial metric offers a clear count of all user actions prompted by your campaign—no fancy calculations needed.
In PPC, a conversion is defined as the action someone takes after they’ve clicked the ad. For a lead-generating campaign, that might mean opting in for a free quote or for a lead magnet or coupon. For a revenue-generating campaign, that might mean purchasing a product or completing an order.
A drop in total conversions is red flag. It's showing that your PPC campaign is losing efficiency and it's time to find out why... and then optimize for it.
As much as you chase high numbers, remember that quality matters as much as quantity. Keep a close eye on your total conversions as they offer a tangible testament to your PPC ad spend's effectiveness.
Conversion Rate (CVR) is the final say on your ad's effectiveness. This important metric indicates the percentage of users who, after clicking your ad, actually complete the desired action.
To calculate your PPC conversion rate, divide the total conversions by the number of ad interactions and multiply by 100. Keeping tabs on your CVR is non-negotiable, because it's the key to unlocking your PPC ad spend's effectiveness.
Example Math...
If 321 people clicked on your ad and 11 of those took your measured action, then your CVR is 3.4% (11/321 * 100 = 3.4)
Cost per Acquisition (CPA) is a measure of the amount of money you spend on your ads to generate one conversion, and it’s your campaign's cost efficiency litmus test. CPA reflects your campaign's cost-effectiveness.
Ideally, you are generating enough revenue from your after-the-click experience that CPA doesn’t matter. But if you can’t generate a high enough Average Order Value (AOV) or Lifetime Customer Value (LTV) to justify your CPA, then chances are you’ll need to optimize your PPC ad campaigns… or more likely, you’ll need to change your offers and funnels so that you’re earning more in revenue per conversion than you’re spending to get that conversion.
There are a variety of factors that can lead to a change in CPA—product seasonality, tired offer, keyword competition, algorithm changes, and so much more.
Click-through Rate (CTR) provides a first impression of your ad's appeal to viewers. A high CTR means your ad's hit a chord with your audience.
“CTR is an important metric to measure the ratio of an ad’s views vs the number of viewers who actually engaged with a click on that ad,” says Tier 11’s in-house Google PPC expert Nick. “This can vary by campaign type, for example, a healthy CTR in non-brand search should be +4%, while in shopping campaigns, a CTR of 1% is healthy!”
A high CTR alone doesn't spell success. An ad generating numerous clicks but zero conversions is like a shop filled with window shoppers.
Nick says, “in general, you should aim for as high a CTR as possible for your Search, Shopping and Display campaigns. For YouTube campaigns, make sure your content is optimized for your target audience.”
But he cautions, “a high CTR for YouTube ads can be costly if you’re driving clicks from viewers who aren’t in your target audience. CTR for Performance Max campaigns is not a useful metric as Pmax uses all Google Ads channels, and the CTR will be an aggregate of high and low CTRs from each channel.”
Remember: CTR is a piece of the PPC puzzle, but remember, it's not the entire picture.
Quality Score, Google's rating of your keywords and PPC ads' quality and relevance, is an often overlooked but critical PPC metric. A high Quality Score means your ad, landing page, and overall PPC campaign are on point.
The Google ad quality score is influenced by:
Neglect your ads’ quality score at your own risk! It's integral for optimizing your campaigns for maximum ROI.
In PPC, Impression Share is a clear indicator of your ad's visibility. In Google, ad impression share is calculated by dividing your ad impressions by the total eligible impressions. According to Google, “Eligible impressions are estimated using many factors, including targeting settings, approval statuses, and quality. Impression share data is available for campaigns, ad groups, product groups (for Shopping campaigns), and keywords.”
The higher the Impression Share, the more frequently your ad appears in relevant searches. However, remember, visibility without conversion is just wallpaper. It's crucial to analyze Impression Share alongside other PPC metrics to truly gauge your ad's impact.
View-through conversions shine a light on display campaigns' indirect influence on customer behavior. If someone views your ad, doesn’t act right away, but later converts, then this behavior is tracked as a view-through conversion. Google Ads allows you to set the time frame after viewing to count conversions; if you select a longer window, the number of view-through conversions Google tracks will increase.
View-through conversions offer insights into user engagement post-ad-viewing and serves as a roadmap to improve user experience and boost conversion rates. In short, measuring display campaign effectiveness with view-through conversions isn't just smart—it's strategic.
Understanding the full customer journey and keeping a vigilant watch on your Marketing Qualified Leads (MQLs) offers a deep dive into your campaign's effectiveness, especially if you’re in a service-based business such as personal injury or coaching.
But what is a marketing qualified lead? A marketing qualified lead is a contact who is beginning to warm up, and has started to take actions which indicate they might purchase in the future.
Some tips for MQL tracking:
Tracking full customer journeys and MQLs gives you a deep dive into your campaign's effectiveness. It's not just about improving performance; it's about redefining it.
When dissecting top of funnel traffic, prioritize the crucial PPC metrics to monitor, such as micro-conversions, for a deeper understanding of audience engagement. This twin strategy provides brands the lens to observe overarching KPIs while also identifying chances to refine current campaigns. It narrows down on those user interactions that subtly shift the needle towards your objectives.
Micro-conversions are the little victories that pave the way to the big win. Think newsletter sign-ups or items added to the cart. Keeping tabs on these actions offers marketers a sneak peek into the effectiveness of their PPC campaigns, helping them boost overall performance. Keep an eye on conversion rates and view-through conversions, both of which are key barometers of your ad spend's success. A solid conversion rate means your ads are hitting the mark with your audience, while view-through conversions show that your ads are prompting users to act, even if they're not clicking directly on them.
Metrics like time on site and pages per session are your secret weapons in understanding audience engagement. Digging into this data can help you tweak your ad creatives and targeting strategy to ramp up your quality scores and ultimately, your ROI. Don't forget the importance of the quality score, which is determined based on ad relevance, landing page experience, and click-through rate. Higher quality scores translate into better ad ranks and lower CPCs, which can turbocharge campaign performance and keep your ad spend in check.
In the realm of PPC, vanity metrics are all glitz and no substance. They dazzle, they make a good impression, but they often fall short when it comes to driving substantial business results. They're not entirely futile, but they fail to narrate the complete success story of your campaign. They are the sidekicks, not the superheroes. Let's delve deeper into some common vanity metrics:
The true champions of your PPC campaign are the metrics that directly affect your revenue, CPA, CTR, and CVR. Maintaining your focus on these pivotal players, let vanity metrics perform the secondary role they're designed for.
The important metrics you need to keep an eye on encompass Revenue, Total Conversions, Cost Per Acquisition (CPA), Click-through Rate (CTR), Conversion Rate (CVR), Quality Score, Impression Share, Average CPC, and Lifetime Value of a Customer (LTV). Furthermore, don't discount the effect of view-through conversions, tracing comprehensive customer journeys, micro-conversions, and Marketing Qualified Leads (MQLs). They're all helpful metrics for appraising and boosting your campaign performance.
While all metrics offer valuable insights, Revenue and Cost Per Acquisition (CPA) are particularly crucial. Revenue demonstrates the direct impact of your PPC campaigns on your bottom line, while CPA allows you to assess the cost-effectiveness of your campaigns. These metrics directly reflect the financial success of your advertising efforts.
There's no one-size-fits-all answer to this as it largely depends on your campaign goals. However, Conversion Rate (CVR) holds significant importance across campaigns as it signifies the effectiveness of your ads in driving desired actions. A high CVR indicates that your ads aren't just attracting clicks, but also compelling users to complete the desired action.
CTR and Quality Score should be at the top of your list for improvement. CTR is vital as it reveals the appeal of your ads to viewers. A high CTR implies that users find your ads enticing enough to click on them. On the other hand, enhancing Quality Score can minimize your average CPC and bolster ad rankings, lifting the overall performance of your campaign. This score mirrors the relevance and quality of your keywords and PPC ads as per Google's assessment, making it a significant driver of campaign success.
PPC metrics are your trusty compass, steering your ad campaigns toward greater success. From revenue to impression share, these important metrics give you a complete snapshot of your campaign's performance. Remember, they aren't just nice to have—they're crucial.
Mastering crucial PPC metrics to monitor such as Quality Score, Conversion Rate, and Ad Spend isn't a choice—it's a must. Furthermore, metrics like Micro-Conversions and View-through Conversions deliver valuable snapshots of your audience engagement. These aren't just helpful metrics; they're game-changers for your ad spend effectiveness.
Here at Tier Eleven, we don't just understand these metrics, we live and breathe them.