It’s that time of year again, budget meetings and market analysis time. With this comes the endless work of figuring out your advertising budget for the year and figuring out whether your advertising is working properly.
The good news is that will all the advancements in technology, there’s more information out there than ever to try and figure out what is and isn’t working.
The downside, of course, is that it is pretty much impossible for someone to actually look through all the information available without wasting a ton of time.
The real trick is not just making sure that you are looking at all the relevant information, but also making sure that you are looking at only the relevant information. In short, when it comes to PPC metrics/PPC campaigns metrics, you want to ensure that you are pinpointing the correct KPIs to focus on.
Understanding Your KPIs
Pay per click advertising is quickly becoming one of the simplest and most cost effective means of getting your brand out there. With all the free extensions that custom tailor your ad experience to reach the customers you need it’s important know what data matters and what to look at.
All PPC’s have KPIs (Key Performance Indicator) that tell you how well that ad is performing. Most of them are fairly standard and should be part of everyone’s advertising report. Number of clicks, sales, return visits, all these things are important to your marketing budgets
Some data though, not so much.
Here is a freebie: the percentage of customers with red hair probably is not a valuable KPI.
The Big Three
There are a ton of different metrics that you can use to evaluate PPC marketing campaigns, but for the most part, they are going to be split into three different categories: traffic data, conversion data, and sale data. We are going to go a little deeper into each category in this article, but here is a simple rundown of the big three:
Traffic Data: Traffic data is essentially measuring clicks. There are a lot of different ways of doing that, but at the end of the day, all traffic data is going to be about how many people are visiting your website, when they visit, who they are, and other questions of that nature. The point of traffic data is to figure out why people are clicking on your advertisements, and how you can implement strategies to get even more people to click.
Conversion Data: Probably the second most important of the big three, this tells you what users are doing on your site. How long they stay, what page/landing page they visit and whether or not they buy something. This is crucial to not wasting money if users are visiting but not buying, especially when running PPC ads. No one wants only window shoppers.
Sales Data: Sale data is probably the most important category but is sometimes the most difficult to track. But, at the end of the day, sales are the most important part of any business performance, and so sale data has a lot of the most vital KPIs. You want clicks, you want customers, but above all you want sales.
Ideally, your marketing analysis should be focused on all three of these categories.
Traffic Data
Traffic data is probably the most dense of the three. You can learn a lot from all this data. User locations, likes, habits, demographics, all sorts of key persona information about potential customers.
This is useful stuff, and is often worth a deep dive, but it is not exactly the magic bullet KPI that we are looking for here. For traffic data, there are basically two major PPC metrics that you are going to want to check first:
Click Through Rate (CTR) is one of the simplest but most important KPIs for PPC Campaigns marketing. It represents how many people click on your ad after looking at it and is usually presented as a percentage. The percentage is typically low, with an average of a little over 1%. If you can boost that number up to something like 4% or even 5%, however, then you are definitely cooking. If you are trying to judge the effectiveness of PPC campaigns, CTR is probably the very first thing that you are going to look at.
Cost Per Click (CPC) is CTR’s less fun cousin. It is pretty much exactly how it sounds – CPC represents how much you are paying the platform every time somebody clicks on your ad. Obviously, you are going to want a lower CPC, since every click is taking a little bit of cash out of your pocket. A high CPC is a great way to end up with a disastrous ad campaign that costs more than it gets you.
If you’re using a PPC campaign then you probably know at least that much. The trick is figuring out whether or not it’s working.
For instance, if you have one campaign that costs $2 per click and gets you a CTR of 4% and a second campaign that costs $5 per click but gets you a CTR of 5%, you might think option two is better.
However, the cost per click is more than double so the CTR increase isn’t worth the advertising cost. Knowing this one metric is the difference between brilliance and disaster, unless of course you like throwing money away, but we figure you don’t.
Conversion Data
The most important piece of data here is conversion rate, which is essentially the percentage of people who become customers after visiting your site. The average conversion rate can vary wildly depending on the industry and the services you actually provide, so you would have to look at industry-specific info to figure out whether you are performing well with your ad PPC campaigns or not.
You should be looking at your conversion data alongside your traffic data so that you understand how many users are visiting and out of those, how many are buying. The key question you want to answer is “Is my sight working? “ .
If people are visiting and not buying, then the answer is a flat no. Figuring this out will help you identify the problem instead of changing your ad campaign or throwing more money into advertising. If people are visiting but not buying, then the problem isn’t the ad, it’s your site.
The other big question is “Am I reaching the right people?” This is also best done by looking at traffic data and conversion data together, especially demographic and interest data. If you are a divorce firm with a low conversion rate and a CTR that is highest among the 14-19 age group, then you can probably figure out that the issue is not with your website. You cannot sell divorce to teenagers, no matter how good your site design is.
Sale’s Data
So, since your business makes money through sales and not through clicks, sale data is going to be the ultimate arbiter of whether or not your PPC marketing strategies approach is working for you. You do not just want to know if your Google ads are catching eyes, or creating customers, you want to know if they are driving sales.
The best metric for this is going to be ROAS, or “return on ad spend.” Basically, you’re finding out if what you’re spending on Google ads is translating to more sales for your business. We all have to make money to stay afloat, but if your advertising is costing more or even almost as much as you’re making from customers, then it’s not working.
At that point, it’s about taking an inventory of what ads are working and aren’t and eliminating waste. It’s easy to just let ad campaigns go since PPC is easy to automate, but at the end of the day, you’re ad spend or spending money hoping to make more than you’re spending, if that isn’t the case, your business won’t last.
Final Thoughts
While most KPIs include quantitative data analysis, there may be some qualitative issues you should track that may not be included here. For instance, understanding how your online brand is perceived and working to fix that may be more important than CTR. After all, who would convert to a brand who’s preceded reputation was sullied and irreparably harmed?
A KPI that is important to one company may not matter right now for another. What performance is considered “good” for you, another company may not care about. Track what matters for revenue, but also consider tracking areas that are sometimes hard to measure and not easily understood.
So, now you know what data to focus on. Hopefully, this makes managing your marketing budget a little easier and points you in the right direction when deciding on your next PPC campaign.
