KPI or Key Performance Indicator is a definitive measurable value which demonstrates a company’s effectiveness to achieve business objectives. KPIs aid to determine the financial, strategic, and operational achievement of your business, while also helping you estimate your standing in the market.
KPI works a little differently in PPC or Pay-Per-Click. Nevertheless, advertisers can use KPIs to determine the success rate of their campaigns. Additionally, KPI will also allow you in setting up Google Ads and Google Analytics before the campaign even begins
What are common KPIs?
Conversion in PPC starts with a single click. Hence, clicks are the early indicators of successful PPC campaigns. As a KPI clicks measure how many internet users have clicked your ad. Advertisers often measure clicks which took place throughout a month to pause ads that aren’t working.
2. Quality Score
PPC advertisers find Quality Score to be the most slippery KPI. Google has created the metric to determine the relevance of the ad content. Understanding KPIs is a little complicated as it is not as straightforward as clicks.
How does Google quantify Quality Score?
According to Google Ads,
- Quality Score between 7 and 10 suggests that you are paying less money to Google Ads for advertisement.
- Quality Score of 6 or lower suggests you’re paying more money to make ads relevant.
Given that there is a confusion with measuring Quality Score, advertisers focus on having an improved Quality Score to reduce paying more money for advertisement.
3. Click-Through Rate
Click-Through Rate (CTR) is the most crucial element to measure a campaign’s performance.
You can measure CTR in the following way:
Total Number of Clicks in a month ÷ Total Impressions
This formula reveals that out of 1,000 impressions, the ad was clicked around 100 times. Hence, your CTR is 10%.
It is important to benchmark and improves CTR of several campaigns. If your CTR performs better it will also boost Quality Score.
4. Cost Per Click
Pay-Per-Click advertisers usually possess a predetermined budget. Further, this helps them to know how much they are paying for an ad campaign. CPC does measure how much payment an advertiser has made.
If you want to measure cost per click then divide the total campaign cost by times the ad was clicked. If you want to check the campaign cost manually then multiply total campaign clicks with CPC.
5. Cost Per Conversion
Just like CPC, Pay-Per-Click allows you to set CPA while setting up advertising campaigns. As per Google, you can calculate CPC by dividing total conversion cost by no. of conversions. CPA is also determined by Quality Score.
6. Conversion Rate or CRV
It is the CVR for which businesses hire PPC marketers/advertisers. Also, conversion rate indicates the success of a campaign. Measuring CRV is easy, you can divide no. of conversions by total clicks.
For advertisers, It is important to aim for conversion other than focusing on impressions or clicks.
7. Impression Share (CPM)
CPM comes into play when a user sees an ad on the internet. Impression Share doesn’t depend on whether a user clicks the ad or not. CPM doesn’t indicate if users found your ads effective. Nevertheless, they determine how much visibility your ads are getting. Advertisers receive competitive insight indirectly with CPM.
8. Average Position
Google tends to balance organic and paid search results. The search giant doesn’t hand over the highest bidder with the 1st position. Hence, Google determines the average position based on an ad’s rank.
You can calculate the ad rank by simply multiplying CPM and Quality Score.
9. Budget Attainment
This is a very essential KPI which PPC marketers should consider. Mostly, PPC marketers avoid budget attainment while measuring PPC performance. They also overspend or underspend the budget due to inconsistency with bidding.
10. Lifetime Value
Lifetime Value of LTV indicates the abilities of a marketer and account’s health. However, it is complex to calculate customer LTV. Companies retaining acquired customers through paid search make much more revenue.
What KPIs should you be tracking?
From the list of the KPIs in PPC which are mentioned, almost all of them are trackable. Moreover, they should be tracked regularly to make sure that the ads are working.
How do you set KPIs for yourself?
When you’re planning for a PPC campaign, you need to have KPIs set for yourself:
- Have a measurable roadmap or a goal as to where you’re headed
- Understand both lagging VS leading indicators
- Focus on a few KPIs and enhance them
- Use deliberate techniques rather than brainstorming ones
- Keep evaluating your KPIs performances
Let’s move on to the KPIs in Google AdWords.
What are the most important factors to review in AdWords in order of priority and why?
Google AdWords is the epitome of PPC. Small to large businesses are turning to Google for advertising and marketing their products and services. Before you kickstart your campaign, certain factors would stop you from burning a hole in your pocket.
Let’s take a look at the factor in order of their priorities:
1. Always have campaign tracking ready
When you’re about to introduce a new product or service, make sure that the progress is tracked. You can track the progress directly through Google Analytics as the tracking system is robust.
2. Keywords, Ads, Landing Pages must align
When you’re setting up all elements in PPC, make sure that they have a common ground. For instance, if you want to make an ad for a laptop, it should focus on the laptop, not the graphics card. Landing pages and ad posts should have relevant keywords throughout the campaign.
3. Negative Keywords are your best friend
This is the most overlooked step. However, adding these keywords aids in filtering irrelevant search & they eliminate spending recklessly.
4. Ads should Rotate Evenly
Your ads must be optimized for click. Moreover, this will help Google to determine which ads trigger more clicks. When you put your setting to rotate evenly, your ads get optimized to all kinds of screens.
5. Use Ad Extensions
With an extension, you can display information related to the company. This information will provide your company with real estate on the ads itself.
When you’re about to choose KPIs for your PPC campaign, keep your end goal in mind. It’s easy to get caught in metrics that don’t really contribute towards your main objectives. When done right, tracking KPIs can make a world of difference to your campaign results and will effectively help you to reap better ROI from your PPC efforts.
Take A Look At The Below PPC Advertising’s Other Chapters
Chapter 2: All About Developing Your PPC Strategy
Chapter 3: Quality Score & Its Impact on Google Ads
Chapter 5: Why Keywords Matter & How They Work in PPC
Chapter 10: The Complete Guide to Ad Extensions
Chapter 11: All Things to Know About PPC Ad Formats