In his Definitive Guide to Measuring Marketing Performance, Paul W. Farris emphasizes that, “few managers appreciate the range of metrics by which they can evaluate marketing strategies and dynamics. Fewer still understand the pros, cons, and nuances of each.” And, this is true.
In the world of digital marketing, key performance indicators show us how productive our tactics are. In PPC, tracking your major KPIs not only helps you determine how successful your campaigns are, but also allows you to make wiser, data-backed campaign decisions. Most importantly, this is the only way to demonstrate the effectiveness of your strategy to your boss or clients.
Now, as the goals of your campaign change, you need to tie your Google Ads KPIs to them. The key to success lies in setting reasonable objectives for each Google Ads campaign and choosing the metrics that will tell you whether you achieved these goals or not.
Now, if you’re not sure what KPIs to track to boost your PPC campaigns in 2020, here are a few ideas that may help you.
The Click-Through Rate
The click-through rate (CTR) indicates the performance of your campaign. It tells you how many people clicked on your ad after seeing it.
Calculating and improving your CTR will not only help you track the success of your campaigns, but also let you boost other metrics such as quality score.
To measure it, you simply need to divide the total number of clicks during the reporting period by its total impressions (people who saw your ad). For example, if your ad gets clicked 300 times and it receives 2000 impressions, your CTR would be 15%.
WordStream’s study shows that the average click-through rate is about 3.17%. Still, keep in mind that there is no ideal CTR benchmark you should strive for. It depends on your industry, target audience, budget, and similar variables. For example, in consumer services, the average CTR is about 2.41%, while in the travel and hospitality sector, this number sits at 4.68%.
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In 2020, performing comprehensive keyword research and understanding search intent remains the backbone of your Google Ads campaigns. However, to get the most of your ads, you also need to monitor how well your keywords perform.
For starters, monitor your keywords’ quality score, CTR, clicks, and other relevant metrics. Based on what you find out, remove those keywords that don’t work for you. You can also determine who sees your ads.
For example, some match types will send higher impressions, clicks, and conversions to you than others. Finally, determine irrelevant keywords you don’t want to show up for and add them to the negative keyword list.
Cost Per Click
When building their Google Ads campaigns, marketers know set budgets and know roughly how much they can allocate to their PPC campaigns. Unfortunately, just because you’ve determined your budget and bids in advance, it doesn’t mean this is what you will spend.
The price of the bid depends on other advertisers you need to compete with during PPC ad auctions. Therefore, you will need to pay a higher bid price.
This is where cost per click (CPC) steps in. It tells you how much you have paid for your ad placement. And, the way you calculate it is simple. You just need to divide the total cost of your campaign by the number of times the ad was clicked on.
When setting up your Google Ads campaign, always keep in mind that this is yet another channel that is supposed to guide people to your site. Still, this is just half the job done. The other half is to inspire those visitors to take the desired action.
Now, conversions mean different things across different industries. For example, in online retail, a conversion means getting a searcher coming from your ad to buy from you. A conversion may also be a booking an appointment or downloading an eBook.
Therefore, you first need to understand what the term conversion stands for in your industry. The next step is to see what the industry benchmarks are. Just like with CPA, conversion rates vary across different niches. According to the above mentioned WordStream study, in dating services, the average conversion rate is 9.64%, while the advocacy sector has the lowest conversion rate of only 1.96%.
There are numerous factors that may influence your conversion rates. Apart from observing industry benchmarks, you should also do your best to convert your visitors into customers. This means improving the quality of your ads, making them relevant to your target audiences and, above all, polishing up your website to ensure their checkout goes smoothly.
Cost per Acquisition
Cost per acquisition (CPA) is one of the most significant Google Ads metrics. Namely, Google explains it as the price you pay for each acquisition. Logically, you will measure it by dividing the cost of your conversions by the number of conversions.
This KPI informs you about the ROI your campaigns are generating. Let’s say you spend approximately $200 to acquire a customer. Now, if the average customer spends $1000 on your products or services, that’s fine. However, if they spend only $100, this means that you’re losing $100 for every buyer.
Now, as for the average CPA benchmarks across different sectors is about $48.96, but this figure varies based on your niche. For example, in the tech industry, the average CPA is $116.61, while in the travel and hospitality sector, it’s $44.73. This is why it is also important to understand industry benchmarks to understand how well your campaigns perform.
Created by Google, quality score is the metric that shows how relevant your ad is. It relies on metrics like CTR, ad format, and your landing page relevance to determine how well your ad meets the needs of your target audience.
Google is constantly changing and improving its quality score. In 2017, they gave advertisers the opportunity to see historical quality score data in AdWords. This way, advertisers gain a better insight into their campaigns and take wiser steps during their campaigns.
Even though quality score changes, the rules are still simple. Google rates your ad on a 0-10 scale and a good score is the one above 7. Anything less than that means you need to invest more in your campaigns to boost their effectiveness.
Many advertisers consider quality score difficult to understand and track because of its complexity. Still, tracking your quality score and improving should be your paramount, as this metric directly affects your other performance metrics like your CPC or CTA.
Just like in any other sphere of digital marketing, Google Ads metrics don’t bring any value when observed separately.
For example, tracking your click-through rate or impressions doesn’t make sense if you don’t see how many of these people actually convert.
Choose the KPIs relevant to their specific campaigns and synchronize them accordingly. Stick to those metrics that indicate your progress and avoid any vanity metrics that may distract you from achieving your goals.