Our 3 Most Valuable PPC Metrics
September 22, 2011
Last week, Wordstream asked the Hanapin team to participate in survey to find out which PPC metrics account managers think are the most valuable. It brought me back to when I was first learning about pay-per-click and felt overwhelmed by all the metrics and 3 letter acronyms that were being thrown around. I had no idea how I was going to use all this data to make decisions. Over time I realized there were metrics I looked at once in a while (view through conversions anyone?) and metrics I looked at every day (CPL!).
To gauge our opinion, Wordstream asked us two questions:
#1: If you could only check three metrics in your PPC account, which three metrics would you choose? In other words, which three PPC metrics do you think provide the most complete picture of your performance?
#2 (Bonus Question): What PPC metric do you think is bogus/overrated/a waste of time?
Below are the responses from Jessica, Dave, and myself.
CPA: If I’m not attaining a good CPA for my clients based on their goals, then I’m not doing my job. Depending on what your conversion is, it’s also important to follow through and understand what sort of ROI your conversions are getting for the client.
CTR: I like reviewing my click-through rates for areas to improve. I think it’s really easy to get too wrapped up in CTR, especially when looking at the ad level. Ads with a high click-through rate are great and can help your Quality Scores resulting in overall lower CPCs; however, if those high CTR ads aren’t ending in a desired result (conversion) from the user then you should rethink the ad.
Impression share: I like the group of IS metrics (IS, Exact Match IS, Lost IS Budget, and Lost IS Rank) because they provide some really great insights into optimization opportunities for your campaigns. Perhaps adding some more budget or bidding up can help you attain additional impressions and clicks, and of course, more conversions. Your campaigns will never have a 100% impression share, but it’s usually better that they don’t as you’ll be spending money on irrelevant clicks.
One metric I don’t take too seriously is first-page bids: I think it’s important to review your bids for those below the first-page bid estimate, but to take AdWords’ suggestions lightly, especially since most advertisers have noticed that their bids will be “estimated below the first page” but showing in an average position of say, a two. I’d suggest reading up on how first-page bid estimates work before you opt to up your bid to $80+ (I’ve seen this!) and understand how the estimates work with the exact match version of your keyword.
CPL/CPA. Most of my work is with clients who have specific CPL goals in mind. Being aware of this makes it easy for me to find problem campaigns/ad groups/keywords and increase overall account efficiency. The logic is simple: If your actual CPL is greater than your target CPL, there are issues in that campaign/ad group/keyword that need your attention. If your actual CPL is less than your target CPL, then your campaign/ad group/keyword is performing on par with your client’s goals.
CTR. CTR is an excellent indicator of how well your ads are performing. Once again, the logic should be clear: higher CTRs indicate that your ad copy is resonating with searchers (assuming you have collected enough click and impression data), whereas lower CTRs tend to indicate problems with your ad copy, landing page or even account structure.
ROI. Probably one of the most important metrics in the eyes of your clients, ROI is a great way to analyze your campaign’s overall profitability.It is important to remember that conversions sometimes have different values associated with them. By calculating your ROI, you can make sure your PPC efforts are profitable to your client without being fooled by seemingly attractive CPLs.
Bogus PPC Metric: Budget. Hopefully I’m not alone when I say this, but campaign budgets are misleading. Although PPC practitioners set budgets as a safeguard, spend can actually exceed your set budgets by up to 20%. This might not be as big of a deal with lower-spend clients, but becomes much more severe with higher-spend accounts. 20% of a $10,000 campaign could really add up! Perhaps budget would seem a little less bogus to me if they actually capped your daily spend at your set budget level.
CPL. All of the clients I work with have a goal CPL (cost per lead) in mind. You want to make sure you are getting out of PPC more than what you are putting in. Having 100 conversions is great, but not if they cost $50 each and only generate $5 in revenue each.
Conversion Rate. Using this metric, you can determine the effectiveness of your landing pages. If you are getting a lot of clicks but have a really low conversion rate, then you know it’s time to update your landing pages.
Click-Through Rate. You might think you’ve written the best, most creative PPC ad ever, but if it doesn’t resonate with users it doesn’t matter. CTR lets you evaluate how well you are communicating with potential customers. I wouldn’t be able to improve PPC performance without it.
Bonus question: Average Position. Don’t get me wrong, average position is a helpful metric, but I think too many people get caught up in trying to be in the number 1 spot without evaluating cost/benefit. If you have a tighter budget it will likely make more sense to appear in positions 3-4 to generate traffic at an acceptable cost per click.
What would your top 3 PPC metrics be? Let us know below and be sure to read the responses from all of the 17 PPC managers interviewed.
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