Metrics That Matter: PPC

Person working on PPC marketing on a laptop

Topics: SEM

Previously, we discussed deciphering the analytics behind your email marketing campaigns. As we continue our series on the Metrics That Matter, we’ll delve into pay-per-click marketing.

Search engines, like Google, Bing, and Yahoo, allow businesses to advertise on their platforms using a bidding system. Like any auction, the “prize” (in this case, the top position) goes to the highest bidder. Pay-per-click (PPC) marketing is the process of bidding for ad placement on search engines by setting a price your business is willing to pay barring a click on the advertisement. PPC is popular among marketers as the model allows businesses to instantly drive traffic to their website rather than wait for organic results. However, not all traffic is created equal. You can better understand if your ads are effective by focusing on the below four metrics.

Click-Through Rate

Impressions show the number of times your ad appears, while clicks display how many times an action was taken on that same ad. Dividing the number of clicks by the number of impressions gives you the ad’s click-through rate (CTR). Acceptable CTRs range between 2%-3%, and anything under 1% is concerning. Poor CTR could be the result of your ad not being in the best position in the search results, being irrelevant to the viewer, or having a low quality score.

Quality Score

Relevancy determines your quality score, from the keywords to the landing page. Pages that are rich in keywords and specific in their message typically receive higher quality scores, which range from 1 to 10. High quality scores can lead to higher ad placement even if your bid is lower than a competitor’s, as Google takes both metrics into account.

Cost Per Conversion

Conversions can be customized to your campaign, whether that be downloading an e-book or making a purchase. Google counts a conversion when a viewer completes the process of seeing your ad, clicking through to your website, and executing on your call to action. Cost per conversion is calculated by dividing the total amount spent on the campaign by the number of conversions. For example: a $100 spend that led to 5 purchases would result in a cost per conversion of $20. This is great if your average purchase order is over $20, but cause for concern if it’s under.

Return On Ad Spend

Return on Ad Spend (ROAS) is determined by dividing the money earned by the cost of your PPC campaign. A positive ROAS means that the investment was worth it, while a negative ROAS presents the task of campaign correction. Additionally, ROAS can help gauge the possibilities of ramping up PPC efforts with an estimation of return on investment.

These four metrics will help you quickly establish the success of your pay-per-click campaign. In the next part of our Metrics That Matter series, we’ll be covering social media. If you’d like to maximize the effectiveness of your PPC campaign, our team of digital experts can help. Contact Axis41, A Merkle Company, today to learn more.