AdWords Metrics: How to Make Sense of Your PPC Data
When it comes to the paid search environment I think it’s safe to say that most people are very results-driven. After all, would you really go through all of the effort to build out, optimize, and monitor your AdWords account on a frequent basis if all you got in return was a blank sheet of paper? Of course not – we put the effort into our search campaigns because we expect results, we want to see an outcome, and we need AdWords performance metrics to alert us of our success or failure.
That being said, looking through all of the data that Google provides can sometimes feel like searching for your child in a giant ball pit. In other words, it can be tough to find something meaningful in the chaos.
Let’s take a look at some of the AdWords metrics that are going to help you really home in on your overall paid search performance and save you some time and confusion in the meantime. Though performance metric importance and priority is going to be slightly different for everyone, I’ll outline a few metrics that can help you come to some preliminary conclusions and determine next steps.
Firstly, Is Your Account Running? Better Go Catch It…
The first step in reviewing account data is to make sure your account is actually performing. You need performance data in order to analyze that data after all. To check that your account is running in a somewhat normal manner, I would focus on Impressions, Clicks, and CTR.
Number of Impressions
The first metric I like to look at is number of impressions for campaigns within the account. Actually, I take that back, I first check to see if there are impressions at all. I use this metric as somewhat of a preliminary check without doing too much digging into the meaning behind the numbers. Impressions are the number of times your ad was displayed to a searcher audience based on matches between your campaign keywords and terms used within search queries.
As a very broad statement, your ads need to be displayed in order to see any sort of performance in your account. If your ad isn’t showing, you’re not even giving searchers a chance to click anything and definitely not leading them down the road to conversions. The bottom line here is that you first need impressions if you’re expecting to perform well in other areas.
If you’ve looked at your impressions and feel like your ad is showing a significant amount of times based on your targeting, that’s awesome, you can move on to some of the more telling performance metrics. On the other hand if you just looked at your impressions and are now feeling like there is more to be desired, I’d suggest asking yourself the following questions:
- Is my budget large enough? You want to make sure your budget is not limiting any traffic. Generally if your budget is being exhausted, Google will stop displaying your ads, thus causing you to miss out on potential impressions.
- Are my bids and quality score holding me back? Your bids need to be competitive enough to get your ad to display, and you need a decent quality score in order to help with ad rank.
Clicks and Click Through Rate (CTR)
After I confirm that my ads are showing to searchers I like to do a quick skim over clicks and CTR, and make sure I don’t have any campaigns that are completely missing clicks or seem entirely skewed in terms of clicks to impressions. It’s a good start when your ads are showing to searchers, but if searchers aren’t clicking on the ads at all you might find yourself at a standstill. CTR helps evaluate how well you are communicating with searchers and can help determine the relevance and effectiveness of your campaign. A high ratio of clicks to impressions is an indication that you are targeting the right audience with appropriate keywords and ad text, and those searchers are responding by clicking through to your site – whereas a low CTR is pointing out that there is some disconnect between you and your audience.
By the way, Google will tell you that 2% is a pretty good click-through rate, but that’s really just average. If you want to do better than average, check out our recent webinar, Totally Insane Techniques Guaranteed to Triple Your CTR:
Are You Cognizant of Where Your Money Is Going?
Now that you’ve confirmed that your account is running (i.e. ads are showing and searchers are clicking), you’ll want to look at some metrics that dive deeper into how well your account is performing based on the most important metric: MONEY. A huge aspect of interpreting your AdWords data is determining whether or not you are taking advantage of your advertising dollars and not wasting money. You can’t expect high profits if you have high costs, so you’ll want to make sure you’re reducing wasted spend throughout your account.
When determining whether or not your money is being well spent, I would suggest diving into CPC, CPA, and budget-focused AdWords metrics.
Cost Per Click (CPC) and Cost Per Acquisition (CPA)
Cost per click, the amount you pay for each click, is important because it ultimately determines the financial success of your campaigns. Cost per acquisition focuses more on how much your business pays in order to attain a conversion. Looking at both metrics will help you to answer the questions as to whether or not you are making money in your account. Generally your CPA will be higher than your CPC because not everyone who clicks your ad will go on to complete your desired action (or in other words, convert).
It’s always a good feeling knowing that people are interested in your ads and are showing that interest by clicking, but if each click is costing you more than you would pay for a fancy dinner it’s probably not going to feel too great at the end of the day. Your return on investment (ROI) will be determined by how much you are paying for clicks, and by what kind of quality you are getting for that investment. It’s important to monitor your CPC so that you can determine if you are under- or overpaying for clicks. And it’s equally important to monitor CPA because it determines whether or not your conversions are being driven at a cost that is profitable.
CPC of course varies depending on competitiveness of the industry among other things, but you still need to take into consideration whether or not you can still make money after you pay for the cost of your clicks. That’s where CPA comes into play; if you’re paying more for that potential customer than you can make off of them, then essentially you are paying for that person to be your customer. Lowering CPC can require some strategy as you want to maintain value while lowering the price you’re paying for each click. Take a look at:
Making improvements in these areas can help bring you towards a lower CPC.
Not fully taking advantage of your entire budget is a crucial metric to pay attention to. Wasting money is far from ideal in most situations, and when it comes to your PPC spend, you want to make sure costs are low so that your overall ROI doesn’t suffer.
The best way to reduce wasted spend and really take control of every dollar in your budget is to focus on negative keywords, which will help to make sure your account is targeted. Allowing your ad to receive clicks based on keywords that aren’t relative to your business offering is only going to lead to wasted spend and unhappy searchers. Monitoring and building out your negative keywords is going to help you better target searchers and filter out searchers that aren’t interested in your product or service and are thus less likely to convert.
And Now a Look at One of Google’s More Controversial Metrics: Quality Score
As a quick refresher, quality score is a Google given measure of the quality, relevance, and performance of your PPC advertising campaigns and is applied to various levels within your account including overall account, campaigns, ad groups, keywords, ads, and even landing pages. Google uses quality score to determine ad rankings as well as how much you pay per click.
Quality score is one of those metrics that has been argued about all over the place. “It’s the most important metric”… “You need a high quality score to perform” … “stop paying attention to quality score” … “there are so many more important metrics than quality score” … these are just a few of the arguments I have heard that continue to pull me in every which way as far as what to actually believe.
Here’s what I think. One very important aspect for Google is that everything within your account is relevant, and ultimately Google just wants to show ads that align with search queries and make searchers happy with the results. Even if quality score didn’t exist, I would still recommend making sure that everything in your account truly is relevant in terms of ad groups, keywords, ad text, and landing pages, because taking those steps is what leads to clicks and conversions. By nature if a searcher enters something specific into a search query, that’s what they expect to see on the search results page. Isn’t that what you are trying to provide anyway? I don’t think that assigning a number to various aspects of your account should change the objective.
The bottom line for me is that although quality score can seem like somewhat of a black box, the important thing to remember is that relevance and effectiveness are both crucial to solid performance, and optimizing your account within the theme of relevance is most likely going to be followed by higher quality scores, so why not take that path. (And if you want to dive deeper into the math behind Quality Score, Larry Kim recently wrote a very thorough, research-driven post about how to hack AdWords and get higher scores.)
A Final Summation
I’ve covered the basics as far as approaching AdWords metrics, but I do want to stress that the “best practices” don’t always fit every account. There are always exceptions and anomalies that will throw you off a bit, but the most important thing to focus on is good performance based on your business goals. Even if you find that something weird is working really well in your account, don’t completely discredit that weirdness; take advantage of any good performance and try to dig deeper as to why something specific is working well for you.