If you’re new to paid search marketing, to say it can be overwhelming is an understatement. How do you know what to track? What’s important? Which KPIs are relevant to your business?
It’s easy to get lost in the numbers and lose sight of what’s happening, let alone if you are making money.
But by taking the time to understand and focus on the right metrics—you’ll be able to identify areas where you’re losing money or wasting time and keep your accounts in check just like any top digital agency.
Here are some of the most common key performance indicators (KPIs) that every PPC marketer should consider tracking:
CTR
CTR is the number of times your ad was shown and clicked on. It’s a great metric to track because it shows how effective your ad is at generating clicks, which are an important part of any PPC campaign.
Also, CTR can help you understand how well your ads are converting by comparing the click-through rate with the conversion rate for each keyword and ad group.
Clicks
Clicks are the number of times your ad has been clicked. They’re the most important metric to track because they show how many people are interested in your product or service.
Clicks are also easy to measure. You can tell how many clicks your ads have received and how much money they’ve brought in.
You should track clicks if you have an e-commerce site that sells products online, run local ads on Facebook, or sell anything at all via PPC–no matter what industry it’s related to.
Conversion rate
Here is where it starts to get a little tricky…
The conversion rate is the number of conversions divided by the total number of clicks. This is a key metric to track, as it tells you how well your ads perform and provides insight into how well your landing page performs.
It’s important to understand conversion rates at all stages in the funnel- from ad to landing page, from landing page back through retargeting or even social media ads.
If you’re getting lots of clicks but not converting at an appropriate rate, then you may need to revisit what keywords or audience segments work best for your business model or look at where you are losing your customers at each of your digital touchpoints.
Cost per acquisition
Cost per acquisition (CPA) is the average cost of acquiring a customer.
In other words, you spend the average amount to get each new customer. You can calculate CPA by dividing your ad spend by the conversions or leads generated from PPC campaigns.
For example, if you spend £10K and have 100 clicks, that lead to 10 sales at £100 each:
- Your conversion rate is 1% (10/1,000).
- Your cost per click is £1 (£10K divided by 100 clicks).
You’d also want to note that this doesn’t consider any costs associated with acquiring leads or sales outside of paid ads like SEO or organic content marketing efforts–these would be considered “offline” costs that aren’t tracked.
ROAS (Return On Ad Spend)
The most common KPI in terms of performance and one you’ll most likely hear is ROAS. (Return On Ad Spend)
This metric is the most common as it actually shows you how profitable specific campaigns are.
ROAS can be calculated by dividing the revenue generated by a campaign by the total cost of that campaign.
For example, if you have an eCommerce store and your PPC ads brought in £100K in revenue for an ad spend of £30K, then your ROAS would be 3:1 (£100K / £30K = 3).
So, what are the KPIs you should be tracking for PPC? The answer is that it depends on your goals and your industry. If you’re an e-commerce site looking to generate revenue from PPC campaigns, then you should definitely be tracking ROAS (return on ad spend).
If you’re an enterprise software company trying to drive downloads of your new app or website feature, then CTR might be more important than any other metric.
In general, we recommend keeping things simple: focus on just one or two metrics at a time so they don’t get overwhelming!