One of the major advantages of Google AdWords is that it makes use of Key Performance Indicators (KPIs) to reflect on how well your marketing campaigns are performing. There are certain metrics the every Google AdWords specialist should take into consideration when they’re reviewing their account. We cover these metrics below because what isn’t measured, can’t be managed.
When your ad is shown on a search results page, on a different website (Display marketing) or on a YouTube video by Google it counts as one impression. Impressions give an indication of how many times the ad was seen by users.
Impressions aren’t the most important metric to consider for Search Campaigns but can be helpful to indicate the search volumes for your keywords and your ad quality when viewed in conjunction with your clicks and click through rate.
However, impressions are a key metric to consider when considering your branding efforts on the Display and YouTube networks.
Clicks are the number of times users who saw your ads clicked or engaged with your ad. Keep in mind that on some ad formats, such as Gmail or lightbox ads, a click doesn’t mean that the user clicked through to your website, but that the user only engaged with the ad.
Clickthrough Rate (CTR)
The number of clicks that your ad received divided by the number of times your ad made an impression (was shown) is your CTR. The CTR will directly affect your Quality Score, and a high Quality Score will decrease your Cost per Click. If your CTR is high then your ads are matching your target market’s intent.
Conversions are valuable actions your website visitors complete after they have clicked through to your website. These actions can include views of key pages (e.g. a “contact us” page), a form submission, a newsletter subscription or an online purchase. When driving traffic to your site, these actions are usually the main focus of your campaigns.
Cost per Conversion
This is the calculation of the cost to achieve an action, like generating a lead. To calculate the cost per conversion, you have to take the total cost of your advertising spend for a period and divide it by the number of conversions generated over the same period.
By monitoring the cost per conversion you can monitor which campaigns are driving the highest return on investment and which should be stopped due to its high cost per acquisition.
The conversion rate is calculated by dividing the total number of conversions for a period by the total number of clicks for the same period and then multiplying that value by 100.
This metric shows you the percentage of visitors that ended up completing valuable (or conversions) actions and will have a direct impact on your cost per conversion. The higher your conversion rate, the lower your cost per acquisition.
This is the overall estimated quality of the elements of your ad campaign, namely:
Your Quality Score will determine your Ad Rank, so it is essential to your list of metrics to report on.
Ad Rank=CPC Bid x Quality Score
Reviewing your Quality Score will allow you to determine how much work certain areas of your campaign needs to improve the performance of the ads and in turn increase ROI.
These metrics are some of the basics that gets monitored on Google AdWords. Most third party reporting tools give you options to customise your Google AdWords report that highlights these and other metrics that may be important to your clients.