The success of PPC campaigns relies on a disciplined planning phase. This is when the effective advertiser makes decisions relating to which PPC metrics they’ll track.
The trick is to match the goals of your PPC campaigns to specific metrics.
By aligning metrics with campaign goals you immediately add a level of discipline and clarity to your PPC campaigns that others simply don’t achieve. If you’re new to PPC strategy and are looking to design your first PPC campaigns I recommend our article on paid advertising platforms and tips for small businesses.
Before getting into the fundamental PPC metrics for small businesses, we’ll first take a brief look at PPC as a marketing channel and cover some of the common terminologies.
Is There a Difference Between a KPI & a Metric?
You’ll often find these terms being used interchangeably when reading about PPC, but there is a crucial difference that we’d like to, humbly, point out.
KPIs refer to an organization’s long-term strategic goals. KPIs are of key concern to the executive-level or department heads. KPIs are the end goals for a quarterly or annual campaign, for example – increase the total number of email subscribers by 15% by the end of the current year.
Metrics are measures of whether or not progress is being made towards achieving a KPI. Advertisers use metrics to monitor their PPC campaigns and identify where improvements can be made to achieve a KPI. Continuing with the above example, an associated metric might be – new active subscribers in the last 30 days.
How Do PPC Ads Work?
As with most digital marketing channels, PPC has evolved over the years. PPC was initially developed by the search engines – think Google, Microsoft/Bing, and Yahoo. Paid social platforms such as Facebook, Instagram, and LinkedIn offer another PPC option. It’s important to note that there are several different ad formats from text to image or video.
A common feature shared by many platforms is that, when running PPC ads, you only incur costs when people click on your ads and end up on your landing pages.
Optimizing your landing pages for good user experience (UX) and ensuring that they are relevant to the ad becomes massively important if you are to achieve good ROAS.
How much a click costs you depends on a multitude of factors, including but not limited to; the platform; the competition within an industry (think professional services vs. a very niche service or product), the targeting parameters (geography, demographic) and, the prominence of the ad or its position on a webpage.
Keep in mind though that not all platforms charge you per click. Facebook, for instance, can charge by impressions instead, especially when in comes to new advertisers. Therefore, tracking your PPC metrics and KPIs becomes increasingly important so that you do not end up wasting your ad budget.
7 PPC Metrics Small Businesses Should Track
Remember the metrics should align with the objectives of your PPC campaign and your business’s KPIs. The following KPIs are universally important across platforms and can be used to identify areas where your PPC campaigns can be improved.
PPC campaigns rely on clicks. Quite simply, the click count shows how many people have clicked on your ads. You can compare clicks daily, weekly, or monthly to identify patterns and trends. Try testing different versions of an ad by altering settings such as the ad design, format, ad copy, CTA button color, or the time that an ad is shown.
An impression is counted when someone sees your ad. Total impressions are an indication of visual awareness showing that your ad is being viewed but not clicked.
Impressions can be an important metric when looking to build awareness of your brand in a new market, or when introducing new or altered brand assets such as a logo.
3. Click-Through Rate (CTR)
CTR is a critical metric for assessing campaign targeting. An ad’s Click-Through Rate is calculated, for a specific period of time, by dividing the total clicks received by the total impressions made.
For example, if an ad made 200 impressions and earned 4 clicks the CTR would be 2%. If people are viewing your ad but not clicking on it the ad may be being served to the wrong audience or something is a miss with the composition of the ad. Is the ad copy relevant, unambiguous, and engaging? A/B split testing can help you optimize your ads and improve your CTR.
4. Cost Per Click (CPC)
Knowing the cost of a click is useful to assess the competitiveness within your industry. It’s also useful for planning and budgeting. Note that CPC is affected by the activities of your competitors: rising CPC indicates increased competition.
CPC is calculated by dividing the total number of clicks by the entire cost of those clicks. For instance, if you incurred costs of $50 that produced 50 clicks the CPC of that campaign would be $1. It’s an important metric for budgeting purposes and understanding how your PPC strategy is performing compared to other marketing channels.
5. Conversion Rate (CVR)
Conversion Rate is a major indication of campaign success. CVR measures the percentage of people that your ad converted. Note that you set your conversion point. A conversion point can be any desired behavior – from a sale to completion of a form, or even spending a certain amount of time on your site.
A campaign’s Conversion Rate is calculated by dividing total conversions by total clicks. Say an ad gets 500 clicks that result in 10 conversions, then the conversion rate would equal 2%.
6. CVR by Audience Segment
Implementing an effective PPC strategy is an ongoing process. Completed campaigns serve as a valuable source of data for future campaigns. Current campaigns can also be optimized in real-time based on the data you’re gathering.
It, therefore, pays to know as much as possible about the users that your ads are converting.
Once they’re on your landing page, information about your audience can be pulled from the browser, from forms and, of course, from sales data. By focussing on CVR by segment you may find some of the assumptions you held about your audience were off the mark or uncover a more profitable segment.
7. Bounce Rate
As touched on earlier, optimizing your ad’s landing pages is vital if PPC campaigns are to be successful. Bounce Rate measures the rate at which people immediate leave a landing page without taking any meaningful action.
A high bounce rate indicates that people are not converting. The first consideration is looking at your ad design to ensure nothing about it is misleading – does the ad match the landing page? The second concern is improving UX. Is your landing page aesthetically pleasing or jarring? Is the crucial information presented clearly in an uncomplicated way?
Next, consider the conversion process; is it a simple process that is presented appropriately or is it overly complicated and unjustified or overly pushy?
Getting More Out of Your PPC Campaigns
PPC campaigns are an excellent way to gain a deeper understanding of your audience. Using metrics to continually improve your campaigns allows you to gain a deeper understanding of your market and ultimately achieve a better Return on Ad Spend.
Remember that all campaign metrics are interlinked and understanding them can highlight potential revenue streams: sometimes all it takes is a fresh perspective on your data.