1. Clicks
  2. Click through rate (CTR)
  3. Quality factor
  4. Cost per click (CPC)
  5. Cost per Conversion / Acquisition (CPA)
  6. Conversion Rate (CVR)
  7. Impression Share (CPM)
  8. Average position
  9. Budget achievement
  10. Lifetime value
  11. Reporting on PPC KPIs

Key performance indicators, or KPIs, are used in almost every industry to measure how well something is working or not.

In PPC, you can use KPIs to determine how successful your campaigns were.

Understanding the key indicators of campaign performance is vital for anyone working in PPC from the start. The goal of each individual PPC campaign should first be adjusted to different KPIs during the campaign planning phase.

Once you know what your campaign is going to achieve and how to measure it, you can set up Google Analytics and Google Ads in advance to make sure you measure performance correctly from day one and ensure the integrity of your campaign results.

Getting your campaign performance right is the only way to demonstrate ROI to your clients and employer.

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Here are the top 10 PPC KPIs to use.

1. Clicks

Every conversion starts with one click. For this reason, clicks are an early indicator of the success of PPC campaigns.

This KPI measures how many people clicked on your ad.

Campaign managers often check in to accounts throughout the month to pause ads that aren't serving and even to increase bids on ads that aren't serving.

Clicks are a great KPI for checking account performance by mid-month. The success of a campaign shouldn't be determined by clicks alone, however.

2. Click through rate (CTR)

Similar to measuring the number of clicks your campaign generated, click-through rate is an important metric of campaign performance.

CTR is measured by dividing the total number of clicks your campaign received in the month (or reporting period) by the total number of impressions. This equation says that out of 1,000 impressions, for example, your ad was clicked 100 times and your CTR is, for example, 10%.

Knowing what CTR is and how to measure it is key to being able to view your performance. Note, however, that there is no perfect CTR campaign that managers should strive for.

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PPC performance varies by industry and a number of other campaign variables.

For example, WordStream found that the average search click-through rate in the auto industry was 4%, versus 6.05% in the dating and personals industry.

Campaign managers running campaigns in the US could use the numbers reported by WordStream to evaluate their own CTR success. However, you should be wary of other variables that are not included in the analysis, such as: B. Budget Spending.

Benchmarking and improving the click rate of various campaigns is not only important as a measure of success, but also because it can influence other KPIs such as the quality score.

3. Quality factor

Quality Score is the elusive KPI among PPC advertisers.

It's a Google-created metric that uses metrics like CTR and other performance variables like landing page experience to measure how relevant your ad content is.

Advertisers find it difficult to understand Quality Score as it is less straightforward than other easy-to-measure KPIs like clicks.

Google can determine the Quality Score of a campaign using the expected click rate, landing page experience, ad relevance and ad format.

Google is transparent about how Quality Score is measured by its team and why it is needed. Hal Varian, Google's Chief Economist, explains how Quality Score works in the Google Ads auction in this popular video.

Google improved its reporting on Quality Score in Google Ads in 2017, but it still comes down to this simple fact:

  • A good Quality Score (between 7 and 10) means you're paying less money to advertise with Google Ads.
  • A bad Quality Score (6 or lower) means you are paying more money.

Google's changes to its quality score reporting made it easier for advertisers to use the quality score in Google Ads and also provided historical data on the KPI. These insights give advertisers the information they need to make smarter campaign decisions.

Despite the confusion, advertisers are still keen to improve Quality Score as it determines how much they pay for each click. The quality score, in turn, can affect other KPIs such as CPC and CPA.

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4. Cost per click (CPC)

PPC advertisers know how much they can pay for an advertising campaign because they are usually on a budget.

While they provide a budget and bid when setting up a PPC campaign, it doesn't mean they are paying for it.

Advertisers bid against competitors for ad positions, but pay the next higher bid price. The following picture shows this concept:

PPC cost per click

Therefore, the cost of running an ad and the clicks it generates are largely determined by other competitors in the PPC auction.

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CPC measures exactly how much an advertiser has paid. You can measure CPC by dividing the total cost of a campaign by the number of times the ad was clicked in that campaign.

If you want to manually check the cost of your campaign, you can multiply your CPC by the number of clicks a campaign received.

5. Cost per Conversion / Acquisition (CPA)

Similar to CPC, when you set up your advertising campaigns, you can set a cost-per-acquisition (CPA).

Google defines average CPA as the price advertisers pay for each new customer they acquire. This is calculated by dividing the total cost of conversions by the number of conversions. Google determines the CPA based on your Quality Score.

There's a little more to the CPA story, however.

While an average CPA is pretty easy to digest, advertisers can also use Targeted CPA, a bid technique used when setting up the campaign.

Targeted CPA allows advertisers to automatically set bids to get as many conversions as possible based on a set CPA determined by the advertiser's budget.

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However, to take advantage of a targeted CPA, you need to understand different bid strategies, set up conversion tracking, and have at least 30 to 50 conversions in the last 30 days.

6. Conversion rate (CVR)

The conversion rate is not only an indicator of the success of the campaign, but also the reason PPC marketers are primarily being hired.

You can measure the conversion rate in Google Ads by dividing the number of conversions the campaign received by the total number of clicks.

Since the conversion rate is expressed as a percentage, for a campaign with 100 clicks and 10 conversions, 10/100 means that the conversion rate is 10 percent.

While campaign managers always keep an eye on conversions, they often set up campaigns to optimize clicks, not conversions.

You can now aim for conversions based on CPA goals instead of focusing on clicks or impressions. However, to be optimized for conversions, your account must have had at least 15 conversions in the last 30 days.

7. Impression Share (CPM)

An impression is created when someone sees your ad. It doesn't matter if they click on it.

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Looking at how many impressions a campaign generated is not an indicator of success, as it does not indicate how many people found your ad to be effective.

However, sharing impressions adds context to reporting by indicating how much of the total impressions your advertising campaigns will receive.

Google divides the total number of impressions your campaign received by the total number of impressions your campaign was eligible for.

“Eligible impressions are estimated using many factors, including targeting settings, approval status, and quality. Impression Share data is available for campaigns, ad groups, product groups (for shopping campaigns), and keywords. "

The impression share gives marketing professionals indirect insight into the competition. If you know you have 50% impression of a keyword, you know your competitors own the other 50%.

As you increase your impression share, you decrease the frequency with which your competitors' ads are displayed. If you want to increase the percentage of impressions, you need to increase your bids and / or budget.

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8. Average position

Google offsets both paid and organic search results for almost every search query entered.

Ads on Google or Bing can appear at the top of the search engine results page (SERP) in position 1, directly below the next ad displayed in position 2, and so on.

Average position tells advertisers where their ad will appear most of the time. Google cannot always give first position to the highest bidder. Therefore, it determines the average position based on the ad rank.

Ad Rank is calculated by multiplying Quality Score by an advertiser's maximum cost per impression (CPM).

Since the average position is indeed an average, even if you know how to calculate it, it's not the whole story as you might have been in positions 1, 4, and 6 that day if your average position was 3 .

Since the first 1-3 ads are shown before the organic search results, everyone has worked so hard that many companies that advertise on Google want to be visible in position 1 from the start.

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It makes sense to want to be in the first position, but most of the time the goal is vanity because being in the first position doesn't necessarily mean results.

Some advertisers may have more conversions in position 4 than in position 1 for some reason. You should use average position to provide context for campaigns and campaign reports, but it should not be used as a target indicator.

9. Budget achievement

Paid search engine marketers almost always receive a monthly budget to run advertising campaigns. Budget achievement measures how close this agency or individual has come to achieving the budget they have set.

Most PPC marketers do not consider budget hit when measuring their PPC performance, even though they do include information on how campaigns are being managed.

The reason marketers tend to over-budget or under-spend each month is because given the persistent fluctuations in the PPC auction, it is difficult to consistently bid and maximize results – a job that requires continuous monitoring and optimization (without the use of machine learning).

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Regardless, I'm making a claim that getting on budget is a KPI that PPC marketers need to think about.

10. Lifetime value

The LTV is a broad indicator of the health of the account and skills of a PPC marketer.

However, calculating customer lifetime value for paid search is complex.

Companies that retain customers acquired through paid search for longer generate significantly more sales.

While LTV is a measure of a company's customer's lifetime with their product and / or services, it can be measured in a number of ways.

For example, in the case of a martech vendor, the LTV can simply be measured by the number of days, months, or years that a customer has spent on the platform.

At a large company like Starbucks, measuring LTV can actually be quite complex. There are numerous considerations (e.g., average customer life, customer retention rate, profit margin per customer, and discounts applied).

While PPC marketers typically wouldn't do complex calculations of the LTV like Starbucks, it could certainly be useful to know how that KPI is measured in other departments.

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Note, however, that LTV means something different to different marketers, but is fundamentally the same for everyone.

Reporting on PPC KPIs

KPIs are not mutually exclusive.

One indicator is unlikely to perform the best it has ever been while others are the worst.

For example, you wouldn't expect a super high CTR and Low Quality Score as the two are related. They tell different parts of the same story.

Improving the click-through rate can have a positive effect on the Quality Score, and improving the quality score can have a positive effect on the cost-per-click and cost-per-acquisition, which in turn leads to more profitable PPC campaigns for customers who stay longer.

With that in mind, it's important that advertisers improve their performance at the click level while making sure they aren't trapped in a single number and remember to take a step back and look at the KPIs that paint a more complete picture, like LTV.

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While it's nice to report on each of the above metrics, KPIs should be assigned to a campaign based on what makes the most sense for the customer and their goals.

Stick to what clearly shows progress according to your customers' standards, and don't overload them with additional KPIs to look good – less is more when it comes to customer reports.

Featured image by Paulo Bobita
Screenshot made by the author

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