PPC Metrics That Matter to Marketing Managers

Marketing managers who have pay-per-click (PPC) advertising as part of their marketing strategy must be able to accurately assess whether their campaigns are working to drive revenue for their business. Therefore, they need to have a comprehensive understanding of the PPC metrics that matter most to allow them to perform that evaluation.

We’ve helped a range of businesses improve their paid media and PPC performance:

• Medius — 555% increase in conversion rate
• United Ad Label — 523% increase in ROI
• RUSH University — 468% increase in conversion rate
• SA Ignite — 400% increase in conversion rate

The beauty of PPC marketing — also known as cost-per-click marketing — is that it is entirely digital. It’s simple: you only pay for an ad when a user clicks on it. Every time a prospect clicks on an ad, you get valuable information, such as the type of audience interested enough to click through to your website and more. That lets you assign quantitative analysis to every aspect of every campaign.

Here are the key pay-per-click metrics you should use to make your PPC campaign management more effective. Once you leverage these PPC performance indicators, you can make confident, data-based decisions, whether that’s continuing with your current efforts or changing course.

Key PPC Metrics to Monitor

Click-Through Rate (CTR)

An ad click-through rate is the number of clicks it receives divided by the number of times it’s shown (impressions). Say you have 10 clicks to a desired product website out of 100 views. Your click-through rate is then 10%.

It’s the most basic determinant of whether an ad is working. What’s a good click-through rate? That depends on your industry and where you’re advertising. It also depends on whether the click comes from a display ad or a user search.

For instance, it might be as low as 2% and as high as 6% on Google. In a few industries, a good rate is more than twice that. So you need to research the data for your situation in order to make a comparison.

There’s another reason to have a high click-through rate with search engines like Google besides reaching customers. The better the rate, the higher your ad ranks, and the better your quality score (see below). That can lower your costs per click over time, which saves you money.

How can you improve your click-through rate?

• Target the right keywords.
• Narrow down your audience.
• Make ads easy to read.
• Consider including a special offer.
• Include a call to action (CTA).
• Test different ads for comparison.
• Try ads on different sites (e.g., Google vs. Facebook vs. Amazon)

Cost Per Click (CPC)

Your cost per click is what you pay every time someone clicks on your ad. You can set a maximum amount (bid) that you’re willing to pay, but you may wind up paying less based on market competition and ad quality score, as mentioned above. Additionally, automated bid strategies can help optimize your bids in real time, ensuring you get the best possible results for your budget without manual adjustments.

To make the most of your cost per click:

• Choose ad placement carefully.
• Be mindful of your maximum bid per click and what bid strategies you are using.
• Create ads that lead to higher quality scores.
• Consider competition for keywords and ad placement.
• Try adding negative keywords to avoid showing on irrelevant search terms.

Conversion Rate

The conversion rate is the percentage of users who convert after they click through your ad. They might be buying a product or signing up for a service or trial offer.

It’s a simple formula:

(conversions/number of clicks) x 100 = conversion rate

This is where the rubber meets the road on your marketing campaigns because it tells you what percent of people are taking the desired action based on your ad.

You can track your conversion rates from different ads by inserting codes into confirmation or thank-you pages displayed after the customer commits to an action. What if your conversion rate isn’t as high as you’d like?

• Target and segment your audience more narrowly.
• Perform A/B testing on different ads.
• Make sure your landing pages are conversion rate optimized and align with your ads.
• Try remarketing to reach out to more likely converts.

Return on Ad Spend (ROAS)

Your return on ad spend, or ROAS, is the ratio of what you spent on your ads to what you earned with them. For instance, if you made $10,000 in revenue from ads and spent $2,000 on ads, you’d divide 10,000 by 2,000 to get your ROAS (5:1 or 500%).

What are some best practices to maximize your return on media spend, in addition to the tips above?

• Try using AI technology and automated strategies to make real-time bid adjustments.
• Time your ads for seasonal use or the customers’ needs.
• Add location-specific keywords for your area.
• Make sure ads are optimized for mobile devices.
• Pursue abandoned shopping carts.

Quality Score

We mentioned above the importance of your Google quality score for costs. It’s a measure on a scale of 1-10 of how relevant your ads, keywords, and landing pages are to a person who sees your ad. Higher Quality Scores typically lead to lower costs and better ad positions.

Your quality score can be checked within your Google account under “Campaigns” and then “Audiences, keywords, and content.”

It’s based on:

• Expected click-through rate
• Ad relevance
• Landing page experience

What makes for a higher quality score? The best way to improve it is to use the tips listed previously: make sure your keywords are relevant and aligned with their landing page. Sometimes that means using niche or long-tail keywords; in other instances, you might have to broaden keyword matches.

Impressions and Ad Position

Ad impressions, aka ad views, are the number of times your ad is displayed to a user, regardless of click-throughs. They’re important because they are an indicator of your ad’s visibility.

Ad position is the rank on the search engine results page. A better ranking gives your ad a better chance of being clicked on and, therefore, a better chance of converting.

Peak visibility is the first ad position on page one of the search results. There are multiple factors that go into ad position and impressions:

• Keyword bids
• Quality score
• Ad extensions
• Competition level
• Geo-targeting
• Ad timing
• Viewer device type

We could write an entire book on the topic, but know that tweaking these factors will give you the best opportunity for an optimum position and more impressions.

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is what you spend to pick up a new customer. It can be even broader, measured for a specific campaign or for your company as a whole. In that case, it’s the total cost of sales and marketing divided by the number of customers acquired in a certain time period.

Your CAC has to be reasonable to your marketing budget. So you don’t want to only measure customers acquired but profitable customers acquired. Building a profitable client base is the key to business stability and growth.

In order to make your CAC as economical and fruitful as possible, use these strategies:

• Hone your customer profile to reach the right audience.
• Constantly test your marketing campaigns on different channels.
• Know your CAC in relation to other marketing metrics and your industry.
• Avoid wasteful marketing that increases CAC.
• Understand the components of your CAC and where you can trim fat.

Other Relevant Metrics

Here are a few other PPC metrics you may wish to explore:

• Bounce rate — the rate of visitors who leave your landing page without taking action
• Average session duration — the average amount of time people spend on your landing page
• Cost per acquisition (CPA) — what it costs to acquire a lead vs. a paying conversion
• Lifetime value (LTV) — what the customer can potentially bring you across the entire relationship, not just one transaction