Most advertising campaigns yield enormous amounts of data for managers, business owners and marketing execs to try and make sense of and put to good use. PPC/AdWords advertising is no different. We need to decide which metrics are most important in order to truly measure the success of our campaigns.
There’s a mountain of content and opinions on how to measure PPC success, which can get confusing so I thought I’d write this article to help distil which PPC Metrics Really Matter, and how various information can paint very different pictures of PPC campaign performance.
We’ll take a look at traffic-focused metrics and how they can be a good starting point, then how conversion-focused metrics are even better and finally how ROI-focused metrics offer the greatest amount of information that help AdWords experts make meaningful changes to PPC campaigns to produce the very best results.
The default setting of many agencies is to simple review and report on the click-through rate (CTR) and/or cost per click (CPC) when discussing the performance of an AdWords campaign. AdWords reporting offers a goldmine of traffic-focused metrics that are incredibly useful, including underused stars such as device segmentation and impression share, and whilst these are a good start, it’s important not to take your eye off the ball and forget the aim of the game – run ads, to bring in new clients and make sales.
It’s jaw dropping to witness just how many AdWords accounts do not have conversion tracking setup. And further to this, if we are surprised enough to see conversion tracking setup, it’s more often than not setup incorrectly, or nowhere near as comprehensively as it should be.
Conversion tracking is basically the identification of a goal linked to an action. The action might be a document has been downloaded, a website visitor has shared their details in a form, a sale has been completed, etc. These are identified, and then tracked through code in the relevant part of your website.
Without conversion tracking in place, the only metrics we can measure are traffic based, such as search impressions (the amount of times your ad appeared), clicks (on your ad) and click-through rates. This isn’t offering a complete picture, and is a risky method of reporting on campaign performance.
Traffic based reporting doesn’t give us a clear or full picture of what’s really happening, and can distort the facts about true campaign performance. By digging deeper, and accessing greater amount of information such as conversion focused metrics or ROI focused metrics, we are provided a complete picture of the investment made, and how it’s being used and whether it’s effective or not. This is where we begin the journey toward ROI focused metrics, as we need to understand the flow of traffic to the site from ads, and the percentage of those clicks that generated quality leads, and which of those leads became a sale, and crucially – what the sale amount was worth, as there’s no use having an average cost per sale from your PPC campaign at a higher price compared to the profit generated from the actual sale.
Let’s assume by this stage you have conversion tracking setup.
Conversion tracking isn’t limited to just leads from your website. Phone leads and direct emails (if listed on your site somewhere) are also connected to conversion tracking and should be understood and counted. It’s not too difficult these days to easily trace leads that come in via phone, but started life on your website, derived from a PPC ad.
What conversion-focused metrics tell you
With conversion tracking in place, we can now track how many people are actually performing a desired action (goal) such as providing their details, completing a form, making a purchase, sending an enquiry, etc. Now we know much more, rather than just the number of people clicking on our ads., we know how many people converted.
It’s at this point that we can start identifying our top-performing campaigns using cost per conversion data.
Conversions are great. We love having visibility of this information and we love reporting on them, but at the end of the day what we really need to know (and report on) is whether those conversions (leads) became customers (unless of course we have some of that information from certain conversions – such as on eCommerce sites where sales are tracked as a conversion).
In most instances conversions tell us how many leads we received, but not how many actual sales were made. That is ROI focused metrics, and that’s the top of the mountain. It’s where the magic happens, and gives us the clearest picture of the performance of our PPC campaigns.
This is where the elite play. It’s the space occupied by companies that want the clearest and truest picture of all. and it’s all about ROI – return on investment.
This is where we track leads from the initial ad click through to the closed sale, measuring revenue and crucially profit on a per-lead basis. When you understand which campaigns, ads and keywords are actually generating revenue & profitability, you’ll be in the 1% minority, and well and truly ahead of your competitors who have no idea where they’re making or losing money on PPC campaigns.
So, we’ve decided to understand which leads are generating revenue. From here we can track specific leads in the clients CRM system back to each campaign, and set up separate phone numbers for each campaign, recording which leads led to sales.
At this stage, we know something much more useful than cost per conversion — we know how valuable a conversion is. We know where to focus our PPC marketing efforts to maximize revenue, and where we can make improvements that impact the bottom line for our clients. This is where meaningful change can be made as a result of this truly valuable information.
Leading AdWords experts understand that all of the metrics I’ve covered above are valuable, and matter.
Traffic data such as impressions, clicks and cost per click tell us how much search demand there is for a particular product or service, and the volume of people responding to PPC ads.
Conversion data tells us how effective our ads and landing pages are at generating leads, as well as how much our leads cost.
As we see above, nothing trumps ROI information. Knowing how much conversions are worth to a companies balance sheet. This data gives us the insight and ability to make changes where the biggest difference can be made.