Make AdWords Metrics Work For You


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emmadavis | Tuesday, October 5th, 2010

Filed under: PPC Tips & Advice, Technology

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Success can be measured in many different ways when it comes to pay-per-click search advertising. Still, it helps to know your way around the metrics that the Google AdWords platform uses to determine performance in a PPC campaign. Each metric has important performance data you can learn from, and when viewed together, these measurements can give you an illuminating report on the progress of your PPC advertising. Want to know more about what each AdWords metric means? Read on.

As I mentioned, it can be very useful to understand what each AdWords performance metric indicates, both when studying a single measurement and when evaluating a campaign across many standards. If you don’t know what each metric represents, it’s hard to comprehend what each number means and why it is important to pay attention to performance at all. As a whole, these metrics make up a state-of-campaign report that can show a birds-eye view of an account’s PPC performance. When taken individually, however, each metric brings your focus down to the ground level of understanding and evaluating the results of your effort. Knowing what each metric means with regards to account performance will help you judge success both through report generation and simply by sorting your account to view each individual measurement.

Impressions

In a Search campaign, the count of impressions indicates how many times one of your ads has appeared alongside organic search results for certain keywords, or how many times an individual keyword has triggered one of your ads. In a Content Network campaign, an ad gets impressions by matching content-related keywords or assigned placements, and a placement or keyword similar gains impressions by triggering ads to display alongside website content. It’s important to know that for the most part a Content Network campaign will generate far more impressions than a Search campaign if left unchecked. On the other hand, many advertisers find more value in an impression on a search results page than one on any number of web pages across Google’s network of content sites. Whichever type of campaign you’re running, you should pay attention to impressions mostly because they are a good indicator of how long a campaign has been running and how many users have had a chance to click on a particular ad generated by a certain keyword. Other metrics measure the success of a strategy; your impressions count is more a measure of a strategy’s opportunity to succeed.

Average Position

On search results pages and on Content Network sites, there are a certain number of ad positions that will display ads based on relevance and strength of the trigger keyword. Depending on the bids you’ve set to achieve impressions, your ads will automatically be placed in one of these positions. Which spot you shoot for is a matter of personal strategy; some marketers aim for only the top ad position while others build bids instead around the second and third positions. Long-tail search terms often display ads in the top position for a minimum bid due to the lack of competition. For marketers with small budgets, the lower positions present an opportunity to still be featured on top search results pages without necessarily setting bids too high. Whichever spot you hope to place your ad in, you can understand more about how certain ads and certain keywords perform when you know which position they rank into most frequently. If a keyword typically places ads in the third or fourth position but performs well on other metrics, it may be worth a boost in bid to see how it performs in a higher position. Similarly, if an ad is regularly displaying in the top positions but lacking across other performance indicators, it may be time for an ad copy rewrite.

Clicks

Once a Google user has reached a search results page or a content site displaying your ads, the next obvious goal is for that user to click your ad and arrive at your landing page. This is unfortunately harder than it sounds; your ad is most likely displaying next to at least a few competing ads that may be more compelling and with a bigger budget than your own. This is why tracking clicks is a crucial measurement for success in a PPC campaign. As I mentioned, an ad’s impression is its opportunity; the click is the first step towards real success. A high click count shows that users find your ad appealing and relevant after searching for the keyword that triggered it. If the same keyword can trigger two ads, or two keywords can trigger the same ad, you can often determine which variation is the better performer by how many clicks it receives compared to the other. Because Google has stringent ad copy policies in place to prevent overly pushy sales language such as “Click Here!” from being included in approved ads, marketers who craft quality ad copy will always benefit from clicks over those that publish sloppy and poorly conceived ads. Getting a customer to click your ad is like convincing him to walk through the door of your store and take a closer look because he liked your window display.

Click-Through Rate

Also known as CTR, an ad or keyword’s click-through rate is determined by dividing your number of clicks by your number of impressions, showing how many users eligible to click on your ad actually did so. This is obviously an extremely important metric to understand as it can be used as a broad indicator of a campaign’s success in driving sales. An ad or keyword that shows a high CTR is one that has proven to attract clicks when displayed, while a low CTR shows that even despite large numbers of impressions an ad is just not being clicked. CTR is a great gauge of success when deciding to raise or lower a bid or when generating new variations on existing ads and search terms. When included in a big-picture view of an account, a high CTR with few conversions can indicate a need for landing page improvement while a low CTR usually means that an ad is not relevant enough to the search terms that trigger it to display.

Cost and Cost Per Click

Your overall cost is a snapshot amount of how much of your budget you’ve spent on a particular campaign, ad group, ad or keyword. Cost per click measures just that: how much it costs when a user clicks on an ad, or cost divided by number of clicks. These metrics are clearly useful in assessing the budget of an account or in determining how much of your budget has been allocated to individual ad groups, keywords and ads. When you set budget limits on certain campaigns, this measurement lets you see how close to the limit you are and whether you should adjust these budget limits to allow for more impressions and hopefully more clicks. It can also be very worthwhile to sort ads, ad groups and campaigns by cost and cost-per-click in order to determine areas that might be ‘danger zones’ in terms of consuming budget without performing accordingly. As far as justifying future courses of action, reporting on cost and cost-per-click can be a great way to indicate efficient account performance. Whether you’re spending your own money in AdWords or working on a client’s account, being on top of how much you’re spending will always be a benefit.

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Conversions and Conversion Rate

So a user has seen your ad, clicked on it and proceeded to your landing page. This is your chance to show that user why he shouldn’t leave your page without buying your product. This is what it’s all about: Conversions. This measurement shows how many users have ended up ‘converting’ or completing a transaction on your site, going from lead to sale with just a couple of clicks of the mouse. You can set a Conversion as whatever action you want visitors to take, whether it’s signing up for a newsletter, donating to a cause or simply completing a sale. Viewing conversions for any individual keyword or ad is a good way to judge performance at the most zoomed-in level, while the conversion count of ad groups and campaigns can determine the best and worst performing segments of your account in a wider view. Conversion Rate measures how many visitors who clicked on an ad ended up converting, or conversions divided by clicks. Like click-through rate, conversion rate is a good success indicator because it shows how many times you succeeded when you had the opportunity to do so. When two ads have a similar click-through rate but one outperforms the other in conversion rate, you have a clear winner. On the other hand, if two ads perform similarly in conversion rate but one has a much higher click-through rate, you may want to reevaluate your ad copy strategy on the one with the lower CTR to get more people clicking the ad.

Cost Per Conversion

We’ve reached the ultimate AdWords indicator: your Cost Per Conversion. As the name implies, this metric shows how much you spend for each customer that converts after seeing and clicking on an ad. In other words, this is how you can measure your AdWords return on investment, or ROI, by comparing your cost per conversion to the value of each customer that converts. What this means is that if your average conversion is worth $100 to you, and your cost per conversion ends up at $20, you are making $80 on every conversion achieved with AdWords. This is a visible, tangible and undeniable measurement of success for an AdWords campaign. As a previous boss once asked me, “If I give you $20 and you give me back $100, how many times am I going to do that?” The answer of course is: as many times as you can! When you can boil down the value of your AdWords PPC campaigns to a simple measure like cost compared to value of a conversion, it’s no wonder that so many marketers find success with AdWords accounts. That is, assuming they know how to implement them properly, of course.

Understanding each of these measurements allows you to judge your account on the whole with each standard of success in mind. Which AdWords metric do you find most valuable? Leave a comment, and get in touch for a free consultation on using AdWords metrics to make your account perform to its potential.

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