There is little point in running any advertising campaign if you do not track its effectiveness and act on this information. One of Paid Search advertising’s great benefits is that it is highly trackable and return on investment can be calculated in a way that is just not possible with most traditional forms of advertising.
Tracking
Conversion tracking helps you to understand how effective your campaigns are at getting users to take the actions you want, e.g., sign up for your email or make a purchase after they click your search ads.
To enable sales data to be passed back to Google, you will also need some code on your site’s page and link your Google Analytics and Google Ads accounts. When setting up conversion tracking, there are several selections to make:
- Conversion type. If you are an online retailer, the chances are you are most interested in sales. Other conversion types include an email sign up and white-paper downloads.
- Conversion window. The conversion window is the maximum time you want to count a conversion after someone clicks or interacts with your ad. Remember that some users will make a purchase several days after they first view a product.
- Attribution model. Customers may visit the same site via several different paths – in which case, how much of the sales should be attributed to PPC? One option is the attribute all the sales to the last website visited, though this may underestimate the contribution from Google ads.
Once tracking is implemented and the accounts linked, conversion data will be available directly in your Google ads account. See chapter 6 for more information about Web Analytics.
Important Metrics
There are four basic metrics for CPC ad campaigns:
- Impression. An impression is the number of viewers to whom the ad is displayed.
- Click. A click is an instance of a viewer clicking on an ad.
- Conversion. A conversion is recorded when a viewer was served an ad, clicked it and took the action you intended for them to take on your landing page.
- Spend. Spend is the amount of money that you have spent on your campaign within a specified period.
These metrics are essential to track, but the measures that will be the most critical for optimising your campaigns derive from combinations of these simple metrics. These are:
Click-Through Rate (CTR)
Click Through Rate is the percentage of ads that are clicked. A high click-through rate indicates that your advert is attractive to users. Google uses the CTR as an input in its quality score, so a high CTR will positively affect your cost per click.
CTR (Click Through Rate) = Clicks / Impressions
Conversion Rate
Conversion Rate is the percentage of clicks that lead to a conversion. A higher conversion rate will reduce your Cost Per Click and Cost Per Acquisition.
Conversion Rate = Conversions / Clicks
Cost-Per-Click (CPC)
Cost Per Click (or CPC) is the amount of money spent on each click. Average CPC is calculated by dividing the total spend by the total number of clicks. A lower cost per click will reduce your Cost per Conversion.
CPC = Spend / Clicks
Cost Per Acquisition
Cost Per Acquisition (or CPA) is the amount of money spent to get each conversion. The average CPA is calculated by dividing the total spend by the total number of conversions.
CPA (Cost Per Acquisition) = Spend / Conversions
An effective campaign has high percentage metrics and low your cost metrics. It is a good practice to set goals for your campaign performance in terms of these metrics. As you continue optimising your keywords, ads and account structure, watch these metrics closely and use them to measure your campaign’s performance as you work toward reaching your goals.
Setting Goals
When running any advertising campaign, set goals against which to measure performance. Example goals include:
- Number of clicks or impressions. If you are trying to gain exposure for a new product, you may be interested in getting the maximum number of clicks or impressions out of your budget.
- ACoS. Advertising Cost of Sales is the % of the sale value spent on advertising. Depending on your margins, you could look to keep this below a certain level.
- ROAS. Return on advertising spend is like ACoS but looks at the ratio of sales to advertising spend.
- Cost per Acquisition. If you are looking at a customer’s lifetime value, you might work sim for a target cost per acquisition.
