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Are you all aboard the PPC train? There are plenty of reasons why professionals gravitate toward pay-per-click advertising in the marketing world:
- It starts working quickly.
- It can get results quickly.
- It can be measured, tested, and optimised.
That last reason is what’s so attractive. From the C-suite on down, it’s easy for everyone involved to get behind a data-driven campaign you can track.
But whether you’re a marketing director, a small business owner, or a PPC strategist, it’s essential that you understand which of these metrics truly matter – and which ones are just for show. Chasing after so-called “vanity metrics” can sink an otherwise good campaign!
Before you even think about launching your new PPC campaign, you should already have goals and key performance indicators (KPIs) set that your chosen PPC metrics feed into. But which metrics are the most valuable?
We’re here to make the process easier. Read on to discover the PPC metrics that actually matter!
5 PPC Metrics That Make Sense
Here’s the good news: this actually isn’t all that complicated. In fact, we can easily define how valuable a PPC metric is by asking one simple question: does this relate to our company’s bottom line?
That’s right, it’s all about the cash… If you’re making pounds, you’re making sense… Okay, you get the idea!
Just like any investment, you’re only launching a PPC campaign to end up with more money than you put in. Here at Common Ground, we won’t even start a campaign unless we’re confident we can get tangible results for our clients.
So, which metrics relate to money? Here are five PPC metrics that make sense (and a few common ones that do not).
1) Cost Per Click
Early on in a PPC campaign, you’ll already start to see how much money you’re spending on every ad click. This is an early indicator of how healthy your campaign is.
It’s useful because it plays a direct role in profitability. As you refine your ads, you should see them resonate more and cause the cost per click to go down, leading to more clicks and a greater campaign ROI overall.
2) Total Conversions
We know that conversion rate is important, but it’s fancier cousin is total conversions (the number of users who have converted over a period of time).
While conversion rate can be difficult to optimise for, it’s easy to tell where your volume of conversions is at. If you want to improve the performance of a campaign, it’s a simple matter of boosting total conversions while keeping the cost per acquisition the same (or lower, if you can manage it).
3) Cost Per Acquisition
Speaking of cost per acquisition (CPA), this metric tells you just how much you’re paying to capture a new lead or customer. Calculating it is simple: how much have you spent so far, and how many leads do you have?
For example, if you spent £750 and got 75 leads, your CPA would be £10. Not bad!
Like with cost per click, your CPA should hopefully be decreasing over the course of a campaign. You can do this by adding negative keywords (the ones that are irrelevant or otherwise hurting your PPC performance), and by shifting more spend to the highest performing ads as the campaign progresses.
4) Customer Lifetime Value
The customer lifetime value (CLV or LTV) transcends an individual campaign, totalling the net profit of an average customer for your company – the total amount of revenue a typical customer brings in less expenses.
Why is this important? Well, remember the cost per acquisition metric? The more valuable each customer is, the more you can comfortably spend to acquire them. Conversely, if each customer actually costs more than they’re worth, you shouldn’t even be running a PPC campaign until you work on some internal systems and processes.
Ultimately, we want to see the campaign’s CPA quite a bit lower than your CLV. This is a healthy indication of a profitable campaign.
5) Return on Ad Spend
This is the big kahuna of any campaign. Somewhere in the mix of cost per acquisition and conversions, there’s how much money you’re actually making on a campaign compared to what you’re spending.
The important thing to understand about return on ad spend (ROAS) is that it’s a lagging indicator – it only tells you how the campaign performed after it’s well under way or already over. So, while getting a 300 per cent ROAS may be your goal, you need to focus on other PPC metrics to help guide you there.
Pro Tip: For a broader look at the return of a campaign, you need to consider the total return on investment (ROI), which incorporates other expenses, such as salary and overhead.
3 Vanity PPC Metrics to Avoid
1) Traffic and Impressions
There are countless metrics related to traffic, such as total visitors or time on site. And yes, they can be informative, but you need to keep them in perspective.
As important as traffic is, if I said I got a million impressions on a new ad campaign, would you be impressed? It sounds big and important, but the logical next question is, how many new customers did the campaign get? Did sign-ups or sales go up?
If it doesn’t translate into paying customers, then it truly doesn’t matter. Harsh, but true.
The last thing you want is to increase ad spend and see additional traffic without seeing a corresponding boost in conversions or sales!
2) Clickthrough Rate
I know, it’s a bit shocking to think of clickthrough rate as a pointless PPC metric. It’s kind of like hearing that Pluto isn’t a planet after all!
But the truth is, as long as your Quality Score is strong, the clickthrough rate is basically irrelevant. Just like with total impressions or traffic, this percentage has no inherent meaning. If your ad gets 5,000 impressions and gets 25 clicks, that’s a 0.5% clickthrough rate, which sounds a little low. But with no other information, can you tell whether it’s good or bad?
The answer is, it depends on your industry and what you’re selling. If the cost works out when these clicks turn to leads or customers, it’s fine!
Now, this doesn’t mean CTR has no role to play. Where it may be useful is in comparing your current CTR to the average CTR from past PPC campaigns (or benchmarks for similar ads in your industry). The CTR can also help you figure out which ads are actually working, so you can hone in on the highest-performing messaging and creative.
3) Engagement Numbers
We’re sure you already know this, but getting prospects to stay on your landing page for ten additional seconds may feel like a victory, but did they convert? Similarly, getting more form completions isn’t an automatic victory.
Facebook “likes” and social media followers don’t matter. Neither does your total number of email subscribers, or what % of a video is viewed. Yes, engagement gives you some information you can use to improve your ads – it’s not something to ignore completely.
But what if you finish a campaign with a billion video views and no new customers? Even micro-conversions like “add to cart” aren’t enough. Engagement without sales is a vanity metric of the worst sort!
PPC Metrics Conclusion
Like most things in marketing, your PPC campaign is always moving and evolving. As it progresses, having all of this data at your disposal is a gift, but you still have to know which metrics relate to your bottom line.
Avoid vanity metrics at all costs and focus on the PPC metrics that matter, such as cost per acquisition, customer lifetime value, and of course, return on ad spend.
If you’re new to the world of PPC or you don’t have time to manage it all yourself, look to our team here at Common Ground. With a detailed understanding of the metrics that determine success, we’ve handled hundreds of PPC campaigns for our clients.
Let an expert PPC agency help you grow your business this year!
Interested in learning more? Contact us today!