The Three Top Level Metrics that Matter in Ad Testing
December 23, 2013
Some of the biggest impacts you will make in your accounts come through ad testing. Not only will you see major gains when you find the right ad, ad testing relatively easy to execute. All you have to do is upload two sets of ads, let them run side by side, and see which one performs better. Of course I’m neglecting to mention all the planning aspects in writing ad copy, planning your tests, what to test, and ultimately keeping up with the changing landscape.
But how do you know which tests actually matter. You probably hear words like statistical significance tossed around a lot. There is a lot of concepts packed into those two words. If you are not sure or don’t have the time to look into it right now; Statistical significance is the probability that the difference between two measurements is not just by chance.
All of this ignores how you evaluate your ad tests though. If you are paying attention to the wrong metrics statistical significance means nothing. You might wonder why certain metrics are going up but you are still struggling. We’ll cover the top three basic metrics for evaluating your ad tests.
Click Through Rate (CTR)
Click through rate is one of the purest metrics. It is easily evaluated by dividing clicks by impressions. After all what good is the ad if you receive impressions but your ads can’t close the deal? The potential lead/customer can’t do anything on your site if they don’t click through and arrive on the site first.
CTR fails when it comes to evaluating for completed actions and conversions. For those just driving clicks it works, but many advertisers are looking for leads or purchases. Sure clicks are important but the real bottom line focus is on what happens after the click. If you lose sight of these aspects you may find ads with a great CTR only to find very few convert meaning each click incurs more cost with no pay off.
Conversion Rate (CR)
Conversion rate is very similar to CTR. Instead of impressions and clicks, it focuses on how many clicks lead to conversions. CR is used to evaluate the utility of incoming PPC traffic. How many of these users that click the add will go on to complete a purchase? This avoids the pitfall of CTR in that you ultimately measure which ad brings in the highest percentage of qualified traffic.
Ultimately conversion rate is a safe metric but you may still need to check other metrics before you declare the winner. This may involve diving into a backend system to evaluate the lead quality or value. Just as not all clicks are created equal, not all conversions are created equal either.
Impressions Until Conversion (IUC)
Unlike the previous two, IUC is not available in the interface. Instead you will have to calculate it yourself. Thankfully you can use Excel easily enough to manipulate your data and examine this metric. Impressions until conversions measures the number of impressions until you get a conversion, simply put its is impressions/conversions.
This measures how many impressions does it take to get a conversion. This can help evaluate not only are your ads appealing to users and generating clicks but are they leading to actual sales or leads. This metric is great when you are making the choices between ads with similar CTR or CR.
How To Not Ruin Your Ad Tests
What good would the numbers be if they were not reliable? Always give you’ve ad rotation settings a quick look over before running a test. I’ve seen instances where accounts were set to something other than “rotate indefinitely”. Often times the impression share of the ads can differ so drastically that the test is lost.
Not only should your ads be showing at the same frequency, they should also be tested head to head. Just about every account has an ebb and flow to it, not only daily but over weeks and months. If your ads are not running at the same time you can not accurately compare them because they are not really measuring the same thing anymore. As usual, there is always follow up reading to do. If you are interested, check out the 9 Common Issues with Data that make your Ad Testing Worthless.
Today we only covered the top-level metrics available in AdWords and Bing. There have been a lot of mentions of leads and revenue. Both of these will require access to analytics platforms. You’ll want to keep these in mind as well but the three metrics above are a simple but effective process to evaluating your tests.
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