Beginner's Guide to PPC Metrics
PPC campaigns are all different with different objectives, so it's important to report on the key metrics that make sense, working with a PPC agency can ensure the best success of your campaign. The KPIs that make sense to your goals will help you determine how performing your campaigns were. This guide will explain you everything you need to know about the most important PPC metrics to track and how it works.
What is PPC ?
PPC stands for pay per click and it’s an advertising model that allows advertisers to create ads on an ad platform that they pay each time their ad is clicked. The ad platforms are hosted by search engines because they allow advertisers to display ads relevant to users search queries.
The aim of pay per click is to lead users who clicked on the ad to the advertiser’s website, where they can complete different type of valuable actions such as purchases or form fills.
How does PPC work?
The ad platforms such as Google Ads work with real-time bidding and a private automated auction using real-time data. Whenever there is an ad spot on a search engine results page, the advertising inventory is instantaneously sold in a private automated auction for a keyword using real-time data. The “winner” who will appear in the top position is chosen based on a combination of factors, including bid amount and the quality of the ad.
These auctions are triggered instantaneously when a user types a search query on a search engine. If there are advertisers that want to show their ads related to the user’s search query, an auction is triggered based on the keywords that are bid on by advertisers. The advertisers that win the auction will then have their ads appear on the search engine results page. To be able to get involved in these auctions, the advertisers set up their ads on ad platforms such as Google Ads and determine the location and schedule for their ads to appear.
The accounts are split into campaigns for ease of management and reporting of different locations, brands, product types, or any other useful categorization. The campaigns are divided into ad groups and each contains keywords and relevant ads.
Keywords are at the center of PPC because they connect the ads to users’ search queries.
On one side, queries are the words that users type into the search box of a search engine to find results. On the other side, keywords are used by advertisers to target these users by matching their search queries.
Keywords work as generalized abstractions of a large range of search queries prone to misspellings. That’s where match types help advertisers to match their keywords with users’ search queries with more or less precision. In other words, advertisers can choose to exactly match keywords with search queries or to allow for variations such as a different ordering of the words, different spellings, or the inclusion of other words. They can also negative match keywords which will prevent ads from being triggered by search queries containing those keywords, to avoid non-relevant traffic.
Along with keywords, the ads are nestled together into ad groups which are divided by common themes. The ads are what the users see when the advertiser wins the auction, they contain headlines, descriptions and a URL of the page they land on. They can show up either on top of the results or at the bottom of the results. It’s recommended to test different versions of ad copy to see which one performs best. Features like ad extensions can be added to enhance the appearance of the ads by communicating more information and making them more engaging. Ad extensions range from sitelink extensions which are links included in the ad that take to different pages on a site, call extensions which add a phone number to the ad.
Budgets & Bids
To participate in the auction, advertisers need to decide how much they’re willing to spend on a given keyword using budgets at a campaign level and bids at ad group or keyword levels.
The budgets are set at a campaign level according to the overall account strategy. They can be exceeded daily but won’t be overspent monthly. While bids are more precise in controlling spend.
All ad groups have bids and include keywords that have bids too and these can override ad group level bids.
The automated bidding strategies enable advertisers to set a specific goal for their campaign and then the ad platform determines the most appropriate bid for each auction. The bid strategies can be applied to each campaign individually or to a portfolio of multiple campaigns.
As the auction is based on a real time bidding system, the actual costs paid by the advertiser doesn’t depend only on the maximum bid but also on competitor’s activity and ad rank.
Each search engine has its own way of looking at other factors to determine which ads to show at the top and most valuable spot on the SERP. For example, Google take into account the bid amount, the relevance and quality of the ad, users’ device and time of the day, the format of the ad if it includes ad extensions.
The ad relevance is determined by the Quality Score metric which is itself determined by the historical click-through-rate, the relevance of the keyword to the ad, the relevance of both the keyword and ad to the user’s search query and the landing page quality.
Ad relevance and Quality Score are critical, the higher they are, the lower the CPC will be. Besides, keep in mind that search engines penalize advertisers who bid on keywords with low Quality Scores by rarely displaying their ads, even if their bids are high. That say, the best tip is to have relevant ads that includes keywords high search volume.
Last but not least, the landing page quality is important too as the ads won’t show often if they take to sites where users’ experience is poor. The landing pages need to be relevant to users and provide them a good experience on site.
Apart from selecting the right keywords which is essential as it allows advertisers to show their ads only to relevant audiences, there are other targeting options useful to optimize their ads’ performance ranging from demographic targeting, device targeting, day and time targeting, to location targeting. Bids are automatically adjusted for keywords based on these targeting criterias, giving more control to advertisers over traffic by bidding when users are more valuable to the business.
What are the key PPC metrics to track?
The real goal of all this hard work isn’t just to show the ads and drive clicks but to convert users!
Conversions are the actions that advertisers want users to complete after they click on the ad and land on the site. The type of conversions depends on the type of business being advertised, it could be transactions, newsletter sign ups, form fills or phone calls.
It’s essential to track conversions to know if a campaign is performing well and how many of them were driven through paid search only rather than other marketing channels.
Ad platforms such as Google Ads can track conversions with a snippet code integrated into the conversion page to collect conversion data.
Conversion tracking can get confusing because usually conversion paths aren’t direct from a simple click on an ad but tend to be more complicated and include multiple searches, site visits or phone calls before completing the conversion. That’s where Google Analytics helps! Analyzing the conversion path helps in determining the different stages the users went through before completing the conversion.
One of the most important factors in the pay-per-click campaign performance is the conversion rate defined as the percentage of users that converted and completed the desired action after they clicked on an ad. Usually a high conversion rate reflects a campaign performing well and driving results for the business. The conversion rate is calculated by dividing the total amount of conversions by the total of ad interactions. On average a good conversion rate for PPC is 2.35% but it varies depending on different factors such as the location and the industry of the company.
A lead campaign is dedicated to generating high-quality leads for a company. It drives traffic to a landing page designed to get users’ details in exchange for a free quote, or a brochure download, it depends on the sector of the business. Usually it’s businesses that have long sales processes that rely on this type of campaigns to drive leads and supply their sales people with sales opportunities.
Cost per acquisition
The cost per acquisition also called cost per action is the average cost an ad incurs when a specific action has been made. It’s calculated by dividing the total cost of the campaign by the total number of actions. This way it allows to put a cost on each conversion and allows for future campaign optimizations.
The Targeted CPA is a bidding strategy that can be used by advertisers when setting up a campaign.
It allows advertisers set bids automatically based on a specific CPA to get as much conversions as they can. Keep in mind that to be able to use the targeted CPA strategy you need to have at least 30 to 50 conversions in the last 30 days.
The revenue is how much you’ve made from your ads compared to how much it costed you. To calculate the ROI you need to subtract the overall costs from the revenue and divide it by the overall costs.
Whenever your ad is shown on Google it's counted as an impression. Ad impressions are often a very large number, in the thousands. They’re also referred to as an “ad view”. Checking how many impressions a campaign has driven isn’t an indicator of performance because it doesn’t show how many users found your ad engaging.
Impression share in contrary adds a certain context to the performance reporting by stating how much of the total impressions your ads are driving. It’s calculated by dividing the total amount of impressions your ads received by the total number of impressions your ads were eligible for.
Furthermore, the top of page percentage tells you how often the ad was shown at the top of the search results page above the organic results.
Clicks is a metric that counts the number of times users have clicked on an ad. In case your primary goal is to increase traffic to the website, clicks would be one of the most important measure of your ad performance. A click means that your ad was engaging enough to get a user to take action and it’s an opportunity to convert that user. Clicks also relates to the number of views your site pages are receiving from your ads.
The Click Through Rate or CTR gives a qualitative measure of how well your ads and keywords are performing. There is no perfect CTR to achieve because PPC campaigns performance varies by industry but on average a good CTR is 1.91% in Google Ads.
It’s recommended to have a look at clicks for the mid-month account performance checkup and see if the ads are enough engaging. Improving the CTR isn’t important just for measuring performance but it can also positively impact other important metrics like the quality scores.
One of the best advantages of PPC advertising is that it is measurable through the different metrics we’ve listed above. They provide access to accurate and detailed data on sales funnels that traditional advertising doesn’t. These metrics allow you to accurately track the performance of your campaign and improve the struggling metrics. While it’s complete to report on all metrics listed above, the KPIs should be reported based on each client’s goals and what would make more sense for them to measure campaign’s performance.
Stick to what clearly indicates progress according to your clients’ standards and don’t overload them with extra KPIs just to look good – less is more when it comes to client reporting.
Polaris is an award-winning B2B SEO agency in London specialising B2B, PPC, e-commerce and the healthcare industry.