As a digital marketer, knowing how to read performance metrics is crucial for several reasons:
Measuring success: Performance metrics allow you to track and measure the success of your marketing campaigns. By monitoring the metrics, you can identify what’s working and what’s not and make necessary adjustments to improve performance.
Optimization: Metrics provide insights into how your audience interacts with your content or ads. You can use this information to optimize your campaigns for better results. For example, if you notice a particular ad is receiving a high click-through rate but a low conversion rate, you may need to adjust the landing page to improve conversions.
Budget allocation: Performance metrics can help you determine where to allocate your marketing budget. By identifying which campaigns or channels are driving the most conversions or revenue, you can invest more resources in those areas and reduce spending in less effective areas.
Reporting: Metrics provide tangible evidence of the impact of your marketing efforts. You can use this data to create reports and communicate the value of your marketing activities to stakeholders or clients.
Understanding performance metrics is essential for evaluating the success of your marketing efforts, making data-driven decisions, and optimizing your campaigns for better results.
So I recorded a short video for this topic using one of the accounts I manage as an example.
How To Read Performance Metrics
[00:00:01] Hi there. It’s Sean Grabowski here from Keepers Digital. I wanted to record this video today to walk you through how to monitor the performance metrics of a Google ads campaign. Whether you have run Google ads in the past or it’s something that you’re considering in the future to generate leads or sales for your company, this will be a quick but informative guide to understand the basic metrics. So the reason I chose this account is because just like yours.
[00:00:30] It is a client selling high ticket professional services, so it’s a great example of an account that is thriving with the usage of well managed Google ads campaigns. Right now they are receiving a return on total spend, so not just the ad spend but all the management costs associated with the work of between 3.5 and 5.
[00:00:55] So for every dollar they put in, they’re making back somewhere between 4:00 and 5:00 dollars most of the time. So I’ll dive into this really quickly here. Of course, cost is the amount of money you’ve spent on your ads impressions, although it’s not perfectly important because this is pay per click advertising you pay every time somebody clicks on your ad. This is the amount of times your ads are shown.
[00:01:23] So if somebody is searching something relevant to what we are targeting, Google will show them an ad, but not everybody will click. The people who do click are counted under here. This defines your total spend. Like I said, pay per click ads are sold on a click basis. The click through rate. This is a metric that is the ratio of all the people who saw an ad, how many of them clicked.
[00:01:49] In this case, we’re generating a really high clickthrough rate of 8.27%. The industry standard for professional services usually sits somewhere between 3 and 7%. Sometimes it does get above the goal of getting a higher clickthrough rate here, which is something we’re constantly working toward, is that Google will then reward us with lower costs on our clicks. What that does is it means that the total cost of acquisition and of acquiring a lead also ends up being reduced.
[00:02:20] It’s in. It’s something that tells Google that we’re providing ads that are highly relevant to the things we’re bidding on, which creates a good user experience for people using Google. In the last two weeks, this business has received 38 leads. In this case, a lead, which is often called a conversion as well, is somebody who’s either called the business or booked a consultation with them.
[00:02:49] The conversion rate is out of how many people who clicked the ad, how many of them went to the website and became a lead. So in this case, we’re floating at 1.93%, the industry standard for high ticket professional services, let’s say medium high ticket. Most professional services in general are usually somewhere around 2% up to 4 or 5%.
[00:03:19] In this case, this is a highly valuable service, so we’re okay with having a slightly lower conversion rate because when people do convert, they’re worth a lot of money to the client, just like click through rate. We’re often trying to get this as high as we can because Google will reward us by clearly understanding that if people are clicking on our ads and landing on the site and becoming leads.
[00:03:43] It indicates to Google that we’re providing a good landing page experience, and clearly people are seeing that this site is something that is providing exactly what they’re looking for. So Google then decides to send more people to us because we’re providing a good user experience for Google’s users. In this case, the cost per lead is $133.53. It’s a service that.
[00:04:11] Generates a lot more revenue than this. The cost of the service is in the several thousands of dollars, so we’re totally okay with the cost per lead of 133 up to $200.00, anywhere in that range is very good for us. What this is, is the cost of the money spent on ads divided by the amount of leads, so.
[00:04:35] There’s a lot more metrics, and there’s a lot more other things in play with Google ads. If you have any other questions or you’d like to hop on a strategy call, please feel free to book a call with me. Alternatively, you can look me up at keepersdigital.com or anywhere across the web. Have a great day.
Must-Track PPC Metrics
For most businesses
- Click-through rate (CTR): measures the number of clicks your ad receives divided by the number of impressions it receives. First, a higher CTR can lead to a better Quality Score, which can help improve your ad position and lower your cost per click. Second, a higher CTR means that more people are visiting your website, which can increase your chances of generating leads or sales. Finally, tracking CTR can help you identify which ads are performing well and which ones need improvement, allowing you to optimize your campaigns for maximum effectiveness.
- Cost per click (CPC): measures the amount you pay for each click on your ad. A lower CPC means that the advertiser is paying less for each click, while a higher CPC means that they are paying more. CPC is impacted by several factors, including the competition for the keywords you’re targeting, the relevance and quality of your ad and landing page, and the maximum bid you’ve set for your keywords. By tracking CPC, advertisers can optimize their ad campaigns to minimize their cost per click and get the most out of their ad budget.
- Conversion rate: measures the percentage of users who click on your ad and then complete a desired action. The action can be anything from making a purchase to filling out a lead form or subscribing to a newsletter. Conversion rate is an important metric for PPC advertisers because it measures the effectiveness of your ad campaigns in generating leads or sales. A higher conversion rate indicates that your ads and landing pages are effectively engaging and converting visitors, while a lower conversion rate suggests that there may be issues with your ad copy, targeting, or landing page experience.
- Cost per conversion (CPC): measures the average cost of acquiring a specific action or conversion on your website, such as a lead or sale. CPC is calculated by dividing the total cost of your ad campaign by the number of conversions it generates. It is an important metric for PPC advertisers because it helps them understand the cost of acquiring a customer or generating a specific action on their website. A lower CPC means that the advertiser is paying less for each conversion, while a higher CPC means that they are paying more.
- Quality score: a rating system that Google uses to evaluate the relevance and quality of your ads and landing pages in relation to the user’s search query. A higher quality score can result in a lower cost per click and higher ad position, while a lower quality score can result in higher costs and lower ad visibility.
- Ad position: refers to the order in which your ad appears on the search engine results page (SERP). The ad position is determined by a combination of factors, including your maximum bid, ad relevance, and quality score. A higher ad position can result in increased visibility, click-through rates, and conversions, but may also come at a higher cost per click.shows where your ad appears on the search results page.
- Return on ad spend (ROAS): measures the amount of revenue generated by an ad campaign in relation to the amount spent on the campaign. ROAS is calculated by dividing the total revenue generated by the campaign by the total cost of the campaign. A higher ROAS indicates that the campaign is generating more revenue than it is costing, while a lower ROAS suggests that the campaign may need optimization.
- Impressions: refers to the number of times an ad is displayed to a user on a search engine results page or website. An impression is counted each time the ad appears on a user’s screen, regardless of whether the user interacts with the ad or not.
- Lead quality: tracking metrics such as lead-to-sale conversion rate and cost per qualified lead can help you optimize your campaigns to generate higher-quality leads that are more likely to convert into paying customers.
- Cost per lead (CPL): measures the cost of generating a single lead. It is calculated by dividing the total cost of your PPC campaign by the total number of leads generated. CPL is a useful metric for lead-based businesses because it helps them determine the cost-effectiveness of their PPC campaigns in generating leads.
When it comes to ecommerce, there are some specific PPC metrics that businesses should track in addition to the general PPC metrics mentioned earlier. There are so many, but here are some must-track PPC metrics for ecommerce:
- Cost per acquisition (CPA): This metric measures the amount you pay for each sale made through your PPC campaigns. Tracking CPA can help you optimize your campaigns to achieve your desired cost per sale and maximize your profits.
- Revenue: This metric measures the total amount of revenue generated from your PPC campaigns. Tracking revenue can help you determine the profitability of your campaigns and optimize your budget allocation.
- Average order value (AOV): This metric measures the average amount of money customers spend per order. Tracking AOV can help you optimize your campaigns to target high-value customers and increase your overall revenue.
- Shopping cart abandonment rate: This metric measures the percentage of users who add products to their shopping cart but do not complete the purchase. Tracking shopping cart abandonment rate can help you identify areas where you can improve your website or checkout process to reduce the number of abandoned carts.
- Product-level conversion rate: This metric measures the percentage of users who click on a product ad and then make a purchase of that product. Tracking product-level conversion rate can help you identify which products are performing well and which ones need improvement.
- Lifetime value (LTV): This metric measures the total amount of revenue a customer will generate over their lifetime as a customer. Tracking LTV can help you optimize your campaigns to target high-value customers and increase your overall revenue.
- Impressions: This metric can be important to ecommerce businesses as it helps them to evaluate the visibility of their products and brand on search engines and websites. By tracking impressions, ecommerce businesses can monitor how many times their product ads are being displayed to potential customers and assess the effectiveness of their ad targeting and copy.
Overall, tracking these ecommerce-specific PPC metrics can help you optimize your campaigns to drive more sales and increase your revenue.
For Local Businesses
Here are some must-track PPC metrics for local businesses:
- Location targeting: This metric shows the performance of your ads in specific locations. By tracking location targeting, local businesses can identify which geographic areas are generating the most traffic and leads.
- Phone calls: This metric tracks the number of phone calls generated from your PPC campaigns. For local businesses, phone calls can be a valuable source of leads and tracking this metric can help them evaluate the effectiveness of their campaigns in generating phone calls.
- Store visits: This metric tracks the number of in-store visits generated from your PPC campaigns. For local businesses with physical storefronts, tracking store visits can help them evaluate the effectiveness of their campaigns in driving foot traffic to their stores.
- Local keywords: This metric shows the performance of your ads for local keywords, such as “near me” or specific city or neighborhood names. By tracking local keywords, local businesses can optimize their campaigns to target users searching for local businesses in their area.
- Reviews and ratings: This metric tracks the online reviews and ratings of your business. Positive reviews and ratings can help local businesses attract more customers, while negative reviews can have the opposite effect.
- Impressions: This metric can be a useful metric for local businesses to monitor their brand reach and awareness, it should be evaluated in conjunction with other metrics to assess the overall effectiveness of their campaigns.
By tracking these PPC metrics can help local businesses optimize their campaigns to attract more local customers, drive foot traffic to their stores, and increase their revenue.
For SaaS, Tech, or App Businesses
These are some metrics that should be tracked to evaluate the effectiveness of the PPC campaigns:
- Cost per acquisition (CPA): This metric measures the amount you pay for each new customer or conversion. Tracking CPA can help SaaS, tech, and app businesses optimize their campaigns to achieve their desired cost per acquisition and maximize their profits.
- Trial or demo requests: This metric tracks the number of trial or demo requests generated from your PPC campaigns. For SaaS, tech, and app businesses, trial or demo requests can be a valuable source of leads and tracking this metric can help them evaluate the effectiveness of their campaigns in generating trial or demo requests.
- App installs: This metric tracks the number of app installs generated from your PPC campaigns. For app businesses, app installs are a key performance indicator, and tracking this metric can help them evaluate the effectiveness of their campaigns in generating app installs.
- App store optimization (ASO): This metric measures the visibility and ranking of your app in the app stores. By optimizing their app store listings, SaaS, tech, and app businesses can increase the visibility of their apps and attract more downloads.
- User engagement: This metric measures how users interact with your app, such as the number of sessions, time spent in the app, and the number of actions taken. By tracking user engagement, SaaS, tech, and app businesses can identify areas where they can improve the user experience and increase user retention.
- Impressions: This metric may not be the most important metric for SaaS, Tech, or App businesses, still be a valuable metric to track as it can help these businesses monitor their ad reach and visibility.
Keep track of these PPC metrics as these can help SaaS, tech, and app businesses optimize their campaigns to attract more qualified leads, increase their conversions and app installs, and generate more revenue.
How to Use Metrics to Improve PPC Performance?
Using metrics to improve PPC performance involves analyzing the data and making data-driven decisions to optimize your campaigns. Here are some steps to use metrics to improve your PPC performance:
- Define your goals: Identify your business goals and define the metrics that will help you measure progress towards those goals. For example, if your goal is to increase sales, you might track metrics such as cost per acquisition, conversion rate, and return on ad spend.
- Monitor your metrics: Track your metrics regularly to monitor the performance of your campaigns. Use tools such as Google Analytics or your PPC platform’s reporting features to collect and analyze data on key metrics.
- Identify areas for improvement: Analyze your metrics to identify areas where you can improve your campaigns. For example, if you notice that your cost per acquisition is high, you might consider adjusting your targeting or ad copy to improve your conversion rate and lower your cost per acquisition.
- Test and optimize: Make data-driven changes to your campaigns based on your analysis of your metrics. Test different ad copy, targeting, and bidding strategies to optimize your campaigns and improve your metrics.
- Continuously monitor and adjust: PPC performance is not static, and metrics can change over time. Continuously monitor your metrics and adjust your campaigns as needed to maintain or improve your performance.
Monitoring these metrics to improve PPC performance involves a continuous process of analysis, testing, and optimization to achieve your business goals and maximize your ROI.
Benefits of Tracking PPC Metrics
Tracking PPC metrics is essential for optimizing your advertising campaigns and achieving your marketing goals. Here are some of the key benefits of tracking PPC metrics on Google Ads or other platforms:
- Identify areas for improvement: Tracking PPC metrics helps you identify areas of your advertising campaigns that need improvement. By analyzing your data, you can identify low-performing ads, keywords, or targeting criteria, and adjust your strategy accordingly. This can help you reduce wasted spend on ads that are not generating results and focus on the tactics that are most effective.
- Make data-driven decisions: PPC metrics provide you with valuable data that can inform your decision-making process. By tracking key metrics such as CTR, conversion rate, CPC, Quality Score, and ROAS, you can make data-driven decisions about your ad campaigns. This can help you optimize your budget, targeting, and messaging to achieve better results.
- Optimize your budget: Tracking your PPC metrics can help you optimize your advertising budget by identifying areas where you can reduce spend or increase investment. For example, if you notice that a certain keyword is generating a high conversion rate but a low impression share, you may want to increase your bid for that keyword to drive more traffic. On the other hand, if you notice that an ad group is not generating any conversions, you may want to pause that campaign or reduce your bid.
- Measure ROI: PPC metrics help you measure the return on investment (ROI) of your advertising campaigns. By tracking your conversion rate and ROAS, you can determine the revenue generated from your ad spend. This can help you justify your advertising investment to stakeholders and make informed decisions about future marketing investments.
- Stay competitive: Tracking your PPC metrics can also help you stay competitive in your industry. By analyzing your data, you can identify trends and changes in your market and adjust your strategy accordingly. This can help you stay ahead of your competitors and capture new opportunities for growth.
In conclusion, understanding how to read and analyze performance metrics and PPC metrics is essential for any marketer looking to achieve success in their online advertising campaigns. By tracking the right metrics and interpreting them correctly, you can gain valuable insights into the performance of your campaigns and make data-driven decisions to optimize for better results. Remember to focus on the metrics that matter most for your specific campaign goals, and don’t be afraid to experiment and adjust your strategies based on what the data tells you. By following the tips and best practices outlined in this article, you’ll be well on your way to achieving your online advertising goals and driving real business results.