http://www.wordstream.com/cost-per-clickOverwhelmed by all the PPC metrics available in your AdWords account? Information is good, but information overload is paralyzing, so it’s crucial to strip away the excess and overkill – and focus on the AdWords metrics that really provide valuable insight into your PPC performance. So what are they? Which PPC metrics work the hardest and speak the loudest?
We asked seventeen paid search marketing experts two questions:
#1: If you could only check three Pay Per Click metrics in your PPC account, which three PPC metrics would you choose? In other words, which three PPC metrics do you think provide the most complete picture of your performance?
#2 (Bonus Question): What PPC metric do you think is bogus/overrated/a waste of time?
Read on to find out what three PPC metrics these AdWords experts think are crucial to understanding your campaign performance – and what metrics are worthless.
Our panel of experts includes:
- Crystal Anderson
- Bethany Bey
- Geordie Carswell
- Jessica Cates
- Tom Demers
- Brad Geddes
- Joe Kerschbaum
- Larry Kim
- Aaron Levy
- Shawn Livengood
- Elizabeth Marsten
- Kate Morris
- Sara Rennich
- Dave Rosborough
- Chad Summerhill
- Matthew Umbro
- Joe Vivolo
Skip to the bottom to see the most popular answers.
On any given day one metric can be more telling than another in terms of performance and can help guide your optimization strategies. That said, since I have to pick just 3, I would have to check: CPA, CTR, and Conversion Rate.
Why CPA? Every campaign should have a CPA (or ROAS) goal that you judge performance against. You can certainly drive a TON of conversions, but in the end, you need to make sure they are being driven at a cost that is profitable.
Why CTR? While CPA lets you know if conversions are being driven at a profitable rate, CTR lets you see (to a degree) quality of your traffic. If performance isn't what you expect, drilling into your CTR can be one way to determine if the terms and ads you are using are having a negative impact on performance.
Why Conversion Rate? Conversion rate is another great metric for really drilling down to how your terms and ads are performing for you. You may have a great CTR, but if you aren't converting any of those clicks, conversion rate will help tell you that and you'll know it's time to optimize. Conversion rate also let's you look at the rate trend (vs. just absolute conversion number trend) which can help you compare to conversion rates from other advertising avenues – comparing to other metrics is vital in understanding how well your campaigns are performing outside of just your PPC silo.
What PPC metric do I think is bogus/overrated/a waste of time? Impression Share. It 100% has value, just not in judging performance of your campaigns, esp. against CPA/ROAS goals. Just because campaigns have 90% of impression share doesn't mean they are doing well, and having 30% doesn't mean campaigns are doing poorly. It's important to look at impression share in conjunction with your goals for it to have value.
Crystal Anderson spearheads the 12-person paid search division at SEER Interactive, a Philadelphia-based search agency. She began her PPC career in early 2006 and has managed PPC accounts across multiple platforms, internationally and with monthly budgets from four to six figures. You can follow her on Twitter at @CrystalA.
CPL – All of the clients I work with have a goal CPL (cost per lead) in mind. You want to make sure you are getting out of PPC more than what you are putting in. Having 100 conversions is great, but not if they cost $50 each and only generate $5 in revenue each.
Conversion Rate – Using this metric, you can determine the effectiveness of your landing pages. If you are getting a lot of clicks but have a really low conversion rate, then you know it’s time to update your landing pages.
CTR – You might think you’ve written the best, most creative PPC ad ever, but if it doesn’t resonate with users it doesn’t matter. CTR lets you evaluate how well you are communicating with potential customers. I wouldn’t be able to improve PPC performance without it.
Bonus question: Average Position – Don’t get me wrong, average position is a helpful metric, but I think too many people get caught up in trying to be in the number 1 spot without evaluating cost/benefit. If you have a tighter budget it will likely make more sense to appear in positions 3-4 to generate traffic at an acceptable cost per click.
For accounts I manage, the typical, most-watched metrics are:
- Cost per conversion (Are you making money on this campaign/ad group/keyword?)
- The new "Relative CTR" metric (How am I stacking up CTR-wise against my competitors?)
- Average CPC (Is Google squeezing my ROI over time via incrementally higher click costs?)
Personally, I think the Quality Score number metric "x/10" is less relevant now than it has ever been. Regardless of the Quality Score number you're assigned, you can now seemingly achieve top ad positions above the SERPs, sitelink extensions, and other "advanced ad features" that used to be only for advertisers with high Quality Scores. Now you can achieve these with even a 4/10 in many cases.
CPA: If I'm not attaining a good CPA for my clients based on their goals, then I'm not doing my job. Depending on what your conversion is, it's also important to follow through and understand what sort of ROI your conversions are getting for the client.
CTR: I like reviewing my click-through rates for areas to improve. I think it's really easy to get too wrapped up in CTR, especially when looking at the ad level. Ads with a high click-through rate are great and can help your Quality Scores resulting in overall lower CPCs; however, if those high CTR ads aren't ending in a desired result (conversion) from the user then you should rethink the ad.
Impression share: I like the group of IS metrics (IS, Exact Match IS, Lost IS Budget, and Lost IS Rank) because they provide some really great insights into optimization opportunities for your campaigns. Perhaps adding some more budget or bidding up can help you attain additional impressions and clicks, and of course, more conversions. Your campaigns will never have a 100% impression share, but it's usually better that they don't as you'll be spending money on irrelevant clicks.
One paid search metric I don't take too seriously is first-page bids: I think it's important to review your bids for those below the first-page bid estimate, but to take AdWords' suggestions lightly, especially since most advertisers have noticed that their bids will be "estimated below the first page" but showing in an average position of say, a two. I'd suggest reading up on how first-page bid estimates work before you opt to up your bid to $80+ (I've seen this!) and understand how the estimates work with the exact match version of your keyword.
Jessica Cates is an Account Executive at Hanapin Marketing.
For me this is:
- Overall ROI – This is the biggest single number in any account, simply because it’s a snapshot of what sort of return you’re getting for the money you’re spending. Taking this number and juxtaposing it with your margins and your other advertising channels is really the ultimate evaluation of PPC as a channel and the overall health of your account.
- Profit Per Impression/Click – I think this is sort of an under-emphasized one – the profit generated by each click or impression within your pay-per-click accounts. This is sort of a more granular and flexible version of ROI for determining the value of different components within your campaigns. What’s the profit per click of a keyword, ad variation, ad group, campaign? These are the questions you want to ask and answer at these more granular levels (hat tip to Brad Geddes, who was the first person I saw write about this).
- Cost Per Conversion – Within the AdWords interface the cost-per conversion data is usually pretty handy, particularly for lead gen campaigns. It’s an incomplete metric – particularly if you have multiple lead types or multiple e-commerce products – in that it doesn’t take into account the actual value of a conversion to your business or the actual margin associated with a lead or sale, but I find myself using it as a quick health check as I’m sizing up account performance “at-a-glance.”
Average position is probably the most overblown stat – it’s not totally useless in that it can be handy to diagnose an issue quickly, but it’s a bit misleading in general, and I’d say it has the biggest net negative impact on campaigns as people frequently “bid to position” to the detriment of their overall ROI.
Tom Demers is co-founder and managing partner at Measured SEM, a boutique search marketing agency offering SEM services including pay-per-click account management, SEO audits, content marketing services, and a variety of link building services such as guest post placement packages and blog strategy.
1. The key PPC metric to judge any PPC account by is profit. The majority of accounts have a goal of increasing the company's revenue and profits, so that's the prime metric that should be used to judge's the success of the account, keywords, ad copy, placements, and landing pages. There are some other reasons to run PPC accounts, and in those cases, you should judge the account based upon it reaching those specific goals. However, if in doubt about the account's success metrics, profit is always a good one. In fact, even during tests, I use Profit Per Impression as my success metric.
2. I'm going to cheat on the 2nd metric and say it's ad rank, which is a combination of two metrics: Quality Score and bid. If your ad rank is too low, then your ads aren't displayed, which means you can't get clicks or conversions. So, metrics such as CTR, conversion rates, and CPA are secondary to ad rank.
3. The third metric I find useful to watch is lost impression share. If your impression share is very low due to a budget issue, you should either remove underperforming keywords and/or tighten your geographic reach so that you have a higher penetration in the areas where people are more likely to convert. If your impression share is too low due to ad rank, then you need to work on bids or Quality Score. You can do a quick account diagnosis with impression share to determine if your major problem is bids, Quality Score, or budget.
Brad Geddes is the founder of Certified Knowledge, a PPC training and toolset platform. He is the author of Advanced Google AdWords, and an official Google AdWords Seminar Leader. You can follow @bgTheory on Twitter to stay up to date with industry news.
Of course, the core KPIs can change from client to client. However, if I just have to choose three that should be most important to the largest number of accounts, then we'll get a little more general. The three metrics that are mission-critical for proper PPC management are click-through rate, conversion rate and cost per conversion. These are the metrics that gauge your success most thoroughly.
Bonus round! I have not found a great amount of value with the view-through conversion metric in AdWords.
Joseph Kerschbaum is Vice President of Clix Marketing. Joseph’s writing on the SEM industry appears widely in Website Magazine, Search Engine Watch, and other industry blogs and journals. Joseph is also coauthor of the Wiley/Sybex book PPC Advertising: An Hour a Day.
If I could only see 3 pay per click metrics in my account, they would be Cost, Clicks and Conversions (1-per click). Why? Cost tells you what you spent, whereas clicks and conversions tell you what you got for that spend. Clicks by themselves aren’t really all that helpful, but clicks can be used to compute important ratios like cost per click, conversion rate, cost per conversion (etc.), which in turn are quite useful. I think of Cost, Clicks and Conversions as being the basic atoms from which all other PPC metrics are formed. Impressions are also important for computing click-through rate (which is an important aspect of Quality Score), but since I’m limited to three, I will have to cut there.
The most bogus PPC metric is probably minimum first page bid estimate, because it’s just an estimate and is often wrong. For example, I’ll often have keywords getting tons of clicks and impressions in a top position, yet it’s below the minimum first page bid estimate.
Larry Kim is the founder and chief technology officer at WordStream.
A strong (and improving) CTR is a sign that ad and keyword selection is relevant to the target audience. If I see CTR tanking over a given day/week/month, either my ads need improvement or there was a strong outside factor worth investigating.
A low CPA (cost per action) indicates that I'm reaching affordable and appropriate keywords and driving a strong return for my client.
Conversions indicate that I've accomplished the goal and (potentially) made my client money! While a low CPA and a high CTR are awesome, they don't mean anything if we only have a few conversions.
Bonus: Personally, I think the impressions metric is a waste of time. For the vast majority of advertisers, PPC is an industry focused on direct response. That respose may show as a click, a form completion, or a purchase but regardless, it indicates an action completed by the user. While a spike or drop in impressions can be an indicator of an outside force (product mention on a TV show, controversial news, natural disaster), that spike doesn't mean much unless it affects click volume, CTR or conversions.
Aaron Levy spends his days as a PPC associate at SEER Interactive, a Philadelphia-based search agency. He's been working in paid search since early 2007, and manages clients across a multitude of verticals with budgets of all sizes. Follow Aaron Levy on Twitter for the latest in PPC strategy, homebrew tips, lowbrow humor and highbrow movie recommendations.
For my three PPC metrics, I'd pick Cost Per Acquisition, Conversions (1 per click) and CTR. The whole point of a PPC account is to generate conversions, so I don't see how you could do without that. Checking CPA will make sure you're getting a good return on ad spend, and CTR will help you diagnose any problems with your ad text, match types, or negative keyword selections.
Bonus question: I think CPM (cost per thousand impressions) is a waste of time. I know that it can be important if you're doing a brand-focused display campaign and are looking to get as many impressions as possible, but I can honestly say that I've never worked on an account where this metric was important in my 3+ years of PPC management experience.
- Relative CTR
- View-Through Conversions
- Lost Impression Share
Elizabeth Marsten is the Director of Search Marketing at Portent, Inc., an internet marketing company in Seattle, WA. She oversees the day-to-day workflow of PPC, SEO, Links, Copy and Social at Portent while also managing some PPC clients of her own.
Conversions, Cost Per Conversion, Quality Score – these three are more indicative of the performance of an account because they are based on relevance and bottom line. Click-through rate is so variant, and impressions and clicks are very sporadic in some cases and don't show the bigger picture. In the end, you want the ads to be doing something for the company. The conversions don't have to be sales, but they have to be something that helps the company in some way, be it a sale or a new member of your free community. And as much as others might debate with me on this, Quality Score because it gives you a better idea of how relevant your account parts are to your potential customers.
Bonus Question: Cost per click. Who cares as long as your cost per conversion is where it needs to be!
If limited to only three metrics when evaluating a pay-per-click account, analyzing Cost per Conversion, Click-Through Rate and Clicks would give the most complete view of an account’s performance.
Hitting an advertiser’s cost per conversion goal dictates the overall success of a campaign. When optimizing keywords or ads, each cost per conversion is analyzed to determine their level of performance. The same strategy can be used at the campaign level.
CTR, though often thought of as a taboo metric for display campaigns, is extremely important for PPC. A higher CTR typically results in a higher Quality Score. Improving a keyword’s Quality Score will consequently increase average position and decrease CPC. Also, CTR helps determine the relevancy of an ad as it pertains to a user’s query. Lastly, negative keywords can be identified by looking at queries for keywords with low CTR’s. Identifying negative keywords removes unwanted traffic from a campaign.
Full perspective of a campaign’s success is gained only when evaluating cost per conversion and CTR against the campaign’s click metric. For example, a CTR may yield irregular results, such as 100% or 50% – these numbers are explained by keywords only having 1 or 2 clicks. In this situation, looking at clicks alongside CTR clarifies the irregular results. Not only does evaluating clicks put other metrics in perspective, but it also identifies the high-volume keywords that are the most impactful to a campaign’s success.
Bonus: What PPC metric do you think is bogus/overrated/a waste of time? Monitoring a campaign’s average CPM does not bring any value or insights to a campaign’s analysis. Average CPM is the metric least important when evaluating campaign success.
Sara Rennich is Technology and Analytics Manager at Fuor Digital.
Favorite Pay-per-click Metrics:
- Spend divided by conversions.
- Most of my work is with clients who have specific CPL goals in mind. Being aware of this makes it easy for me to find problem campaigns/ad groups/keywords and increase overall account efficiency.
- The logic is simple: If your actual CPL is greater than your target CPL, there are issues in that campaign/ad group/keyword that need your attention. If your actual CPL is less than your target CPL, then your campaign/ad group/keyword is performing on par with your client's goals.
- Clicks divided by impressions.
- CTR is an excellent indicator of how well your ads are performing.
- Once again, the logic should be clear: higher CTRs indicate that your ad copy is resonating with searchers (assuming you have collected enough click and impression data), whereas lower CTRs tend to indicate problems with your ad copy, landing page or even account structure.
- Net revenue divided by PPC spend, then multiply by 100 (percentage).
- Probably one of the most important metrics in the eyes of your clients, ROI is a great way to analyze your campaign's overall profitability.
- It is important to remember that conversions sometimes have different values associated with them. By calculating your ROI, you can make sure your PPC efforts are profitable to your client without being fooled by seemingly attractive CPLs.
Bogus PPC Metric: Budget
- The amount allocated to a particular campaign to spend in a single day.
- Hopefully I'm not alone when I say this, but campaign budgets are misleading. Although PPC practitioners set budgets as a safeguard, spend can actually exceed your set budgets by up to 20%. This might not be as big of a deal with lower-spend clients, but becomes much more severe with higher-spend accounts. 20% of a $10,000 campaign could really add up!
- Perhaps budget would seem a little less bogus to me if they actually capped your daily spend at your set budget level.
Dave Rosborough is an Account Executive at Hanapin Marketing. Follow Dave on Twitter.
My top three metrics are:
- Profit (total profit, profit-per-conversion, profit-per-click, profit-per-impression)
- Relative Difference/Change in any PPC metric for internal context (CTR, CR, etc. compared to other search queries, keywords, ads, ad groups, campaigns, date-ranges,etc. For example how does this keyword's CTR compare to the Avg. CTR of the ad group or campaign)
- Quality Score for external context (must be used in light of Max Profit, but can highlight areas of growth opportunity)
Bonus: What PPC metric do you think is bogus/overrated/a waste of time?
- Impression Share at the campaign-level (needs to be at the ad group, keyword, and search query level).
- Quality Score can be misused if you don't consider your profitability (i.e. delete or pause low Quality Score keywords without considerations for their profit contribution).
- And any metric that is reported with no context and is not actionable. Try to have a "What's changed" or "Compared to" aspect.
Chad Summerhill is the Manager of Digital Marketing at U-Pack Moving, as well as the author of the blog PPC Prospector, provider of free PPC AdWords tools for Excel, and co-founder at both queryminer (search query mining software) and gazel (Excel Add-in for AdWords). Follow him on Twitter.
1) Total Conversion Value - Make sure you are assigning a value to your conversions so you know the exact return you are seeing. For e-commerce sites this value will most likely be revenue while other sites might have a predetermined value for a conversion (a white paper signup might be deemed a value of $50). This value should be assigned directly in your conversion tracking code. Though you can see conversion value through your analytics, I prefer to view cost and conversion value, and ultimately return on ad spend, directly within one place, the AdWords interface.
2) Conversion Rate - This metric will tell you exactly how many clicks are turning into conversions, whether it be at the account, campaign, ad group, keyword or text ad level. I value conversion rate more than another conversion metric, cost per conversion, because it better tells you how relevant your keyword/ad combination is to your landing page. The higher this metric the better you are converting your visitors. A low cost per conversion is wonderful, but it doesn't always mean your visitors are converting at a great rate.
3) Click-Through Rate (CTR) - CTR is the best indicator of ad relevance as this metric tells you how close your ads are to meeting search queries. A higher CTR throughout your account generally means a well-crafted structure with effective, keyword-dense and provoking text ads. Suffice it to say, CTR only tells half of the story. If your CTR is high and your conversion rate is low the text ad messaging is probably not being continued on your landing page. Or the components of the landing page need to be reviewed.
As for the overrated metric I would say View-through Conversions. This metric only tells us that your ad appeared on a Display Network site and later that visitor completed a conversion on your site. We cannot definitively say that the visitor converted because of this ad or even came to your site based on the ad. We can conjecture that a view-through conversion was the result of a visitor seeing your ad, but we can't say for sure. Additionally, we cannot assign a conversion value to the view-through. This metric is nice to see, but holds little value because it can't be substantiated.
Matthew Umbro has been in the pay-per-click (PPC) industry since 2007 working with clients across several industries to attain better ROIs and improved lead generation. He has earned his Google AdWords Qualification passing the Fundamentals, Advanced and Reporting exams and has earned his MSN adExcellence certification. He also hosts PPC Chat (#ppcchat), a weekly Twitter chat every Tuesday at 12 PM EST, where industry specialists discuss various PPC topics. Matthew's personal blog, The PPC Blog, contains his thoughts and streamcaps of all PPC Chats.
I think the first and most important metric to look at is Conversion Rate. It’s ultimately the main vital sign that suggests whether or not our campaign is healthy or if it needs serious resuscitation. Of course it can be misleading, and ultimately, the value of your conversion action will deem whether or not you are making a strong ROI or not, but a weak or low conversion rate is probably the first sign that something is wrong. Conversely, a very high conversion rate means we probably aren’t bringing in enough traffic.
The second metric I’d choose is Impressions. It would tell me how popular my keyword choices are and verify that I am targeting large enough keywords groups. By pairing it with my conversion rate data, I would be able to glean how successful and relevant my campaigns were in accessing this potential audience. If this number seemed “off” or low it could begin to give me information on whether or not my bids were high enough, or if my landing pages had enough related copy and content. By itself, an impression number doesn’t mean a whole lot, but it’s a useful tool and access point to many key data points (and in this case – assumptions).
The final key ppc metric I would choose to view is my Cost per Conversion. This obviously is the number that makes or breaks a campaign from a success/failure standpoint. Measure your acquisition cost against cost targets, against acquisition costs from other channels, and ultimately measure the effectiveness of the program.
Bonus: There is one certain metric that I would consider misleading – not exactly bogus, but definitely something that I would dissuade people from focusing on. It's Click-Through Rate (CTR%). You can’t get that coveted conversion unless someone actually gets to your landing page – so for purely statistical analysis of which messaging version beats which messaging version, CTR can be a valuable measuring stick. Where you add in the implied Quality Score implications, it’s certainly not something to ignore, but by itself it doesn’t actually mean anything and its easily manipulated.
Here’s an example. There are a host of buzzwords I could use to improve CTR that probably would not benefit the overall success of the campaign – for instance, free, cheap, 50%, discount, etc.
So which ad headline is more likely to get a highter CTR%? Free Software or Very Expensive Software. This of course is exaggerated, but bringing in lots of people on catchy ad messaging won’t help if what’s on the landing page does not meet your expectations laid out in the ad.
The metrics named most often by our experts were:
- Click-through rate (CTR) with 10 votes
- Cost per Conversion with 6 votes
- Tie: Conversion Rate and CPA with 5 votes each
Bonus answers were all over the map, but one pay-per-click metric was named three times as worthless or overrated: view-through conversions.
Would your answers be different? Which PPC metrics do you live and die by? Let us know in the comments!
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