Tracking and measuring success in PPC campaigns is crucial for optimizing marketing strategies and making informed decisions. With a plethora of metrics available, it can be overwhelming for newcomers to paid search. However, focusing on key performance indicators (KPIs) can provide deeper insights into account performance and paths to improvement. In this article, we will explore three essential metrics that can help marketers gain a better understanding of their PPC campaigns.
The first metric we will discuss is conversion rate (CVR). CVR is the percentage of users who click on an ad and end up converting. While CVR alone provides valuable information, it becomes even more useful when used in conjunction with click-through rate (CTR). CTR measures the quality of the traffic generated by your ads. A high CTR indicates that your target audience resonates with your product and messaging, while a low CTR may suggest the need to target a different audience or refine messaging.
Let’s consider an example to illustrate how CVR and CTR can offer insights into campaign performance. Suppose you have a PPC campaign with a low conversion rate compared to the rest of the account. By looking at CVR alone, it’s challenging to determine whether the issue lies in your Google Ads strategy or your landing page/website. However, by also considering CTR, you can gain a better understanding. If you have a low conversion rate but a high click-through rate, it suggests that your audience resonates with your ad, but there may be a disconnect once they reach the landing page. In this case, focusing on improving the customer experience on the website would be beneficial. On the other hand, if you have a low conversion rate and a low click-through rate, the issue may be with your targeting. Adjusting your keywords and ad copy could help improve performance.
The second metric we will explore is impression share. Impression share measures the percentage of impressions your ad received compared to the total number of impressions available. It is a helpful metric when considering budget allocation and campaign growth. Two main factors influence impression share: budget and ad rank. By analyzing metrics such as Search IS Lost (Budget) and Search IS Lost (Rank), you can determine whether your impression share is limited by budget or ad rank.
If your impression share is lost due to budget, increasing your budget can rectify the issue without impacting your cost per conversion. On the other hand, if your impression share is lost due to rank, you may need to consider bidding more or improving your quality score to gain that impression share. By using these impression share metrics, you can identify opportunities to expand your budget or adjust bidding strategies to maximize performance.
The final metric we will discuss is lifetime value (LTV). Although not a metric found in Google Ads, LTV is crucial for businesses with repeat customers. LTV represents the total value of a customer over the course of their relationship with your business. It differs depending on the industry and can include factors such as repeat purchases, subscription length, or average contract size. Calculating LTV can greatly influence what success in PPC looks like for your brand.
Let’s consider an example to illustrate the importance of LTV. Suppose a company sells socks and sets a target of at least a 3:1 return on ad spend to be profitable. Initially, they optimize their Google Ads account to achieve this return on every purchase. However, after calculating the lifetime value of a customer, they discover that the average customer makes ten additional purchases. With this insight, they can accept a lower initial return because they know that each purchase leads to more long-term growth. By incorporating LTV into their strategy, the account manager can justify more aggressive tactics that may be less profitable initially but result in greater long-term success.
In conclusion, tracking and measuring key performance indicators (KPIs) is essential for optimizing PPC campaigns. While popular metrics like clicks, costs, and conversions are important, they do not provide a comprehensive understanding of account performance. By focusing on metrics such as conversion rate, click-through rate, impression share, and lifetime value, marketers can gain deeper insights into their campaigns and make more informed decisions. These metrics offer valuable information when used in conjunction with core KPIs and can help identify areas for improvement and drive long-term success in PPC.
