PPC Metrics: What They Mean and Which Are Important
No matter the type of industry you’re in, chances are you could benefit from pay-per-click advertising. It’s 2017, and traditional advertising methods are dying a slow death. The days of super-successful billboard, print, and radio ad campaigns are becoming a thing of the past, and more and more businesses are investing their marketing dollars in paid search.
So, what exactly is PPC advertising? Here’s a refresher: PPC, which stands for pay-per-click, is a model of online advertising in which you advertise your business on search engines and drive traffic to your website. As the name suggests, you pay every time your ad is clicked, and essentially, pay for traffic to your website.
If executed strategically, you’re able to drive the most relevant traffic to the most relevant page on your website, hopefully leading to a sale for your business. There are few advertising systems that offer pay-per-click advertising; the most prominent being Google AdWords and Bing Ads. These tools allow users to choose the type of keywords they want their ads to show up for, and then push potential new customers to their website.
Why Should I Do PPC?
Now that we know what PPC is, let’s talk about why it makes sense. Unlike other forms of advertising, with PPC, you have tools and data to measure performance all the way down to an ad click. PPC tools such as Google AdWords and Bing Ads allow users to create, customize, budget, and measure their online advertising. You can see which campaigns result in the most leads for your business, and invest your dollars in the places where you’ll get the most return. After all, if you can’t accurately measure the performance of your advertising campaigns, how can you know where to invest your marketing dollars?
Traditional advertising methods like radio, tv, and print ads make it hard to measure performance. Oftentimes, these advertising channels produce a greater sense of awareness for your brand, but are costly and can be hard to tie directly to sales and revenue for your business.
Think about this: let’s say you have a billboard on a local highway for your carpet cleaning company. Someone driving on that highway sees your ad, but isn’t necessarily in the market for a carpet cleaning service right now. Fast forward a month later, their pet has an accident in the middle of their living room, and they remember your brand offered a carpet cleaning service at a good rate. They look up your brand name on Google, navigate to your website, read your online reviews, and decide to give you a call.
Using data, how can you easily attribute that call to the money you spent on that billboard and measure performance? Spoiler alert: you can’t. At least not easily. Sure, you can get this information later on in the sales process when you ask the customer how they heard of your business. But even with that, attribution can be difficult. With PPC, all of this data is readily accessible for you because everything is tracked online.
The Most Important Metrics
So, before we get into the most important metrics when it comes to PPC, let’s circle back around to exactly how it works. You pay every time your ad is clicked, and your ad is triggered based on a user’s search - so you choose exactly which keywords you want your ads to show up for. Because of this, you’re able to capitalize on user intent by advertising to those already searching for the services you provide. PPC allows you to meet people at their exact point of need, with the right message in the right context.
Let’s discuss the top 6 most important PPC metrics and what they mean.
Average cost per click (CPC): The average CPC is the amount that you spend on a click to your website on average. You can look at this metric account wide, or you can look at it on an individual keyword basis. CPCs vary by industry and market, so there isn’t necessarily a universal benchmark for what makes a cost-effective CPC. It is a metric you will want to look at to determine your budget if you have specific goals in mind. For example, let’s say your average CPC is $10, and your average conversion rate is 10%. For every 10 clicks to your website, one of those people fill out a form and become a lead for your business. If you want to generate 10 leads, you’d have to spend around $1,000.
Impressions: This is the number of people that have been shown your ad. This number is a good indication of how much search volume a specific campaign (or keyword) gets on average. For example, if a certain keyword only has 4 impressions in a month’s span, you can assume that not many people are using that keyword when searching. On the flip side, if a keyword has over 500 impressions, you can assume it’s a higher-volume keyword.
Clicks: The whole objective of PPC advertising is to drive traffic to your website, so obviously, the number of clicks is going to be something you want to look at. This is the number of people that have clicked on your ad and were directed to your website or landing page. It can be hard to look at just this metric and determine whether it’s performing well - this is where the click-through rate (CTR) comes in.
Click-through rate (CTR): Click-through rate is the number of clicks divided by the number of impressions. It is, on average, the percentage of people that see your ad and click on it. You can use this number to evaluate the quality of your ads, as well as the quality of keywords you’re bidding on. Your CTR may be low because your ads aren’t compelling, but it can also be low because maybe you’re bidding on a keyword that doesn’t match up with what your ad says.
Conversions: Depending on the goals you have set up in Google Analytics, a conversion is simply a user completing your goal, or desired action. Based on the type of business you have, that could be a call, contact form submission, or even a sale. Like clicks, it can be hard to look at just this metric and determine whether it’s performing well - this is where the conversion rate comes in.
Conversion rate: Conversion rate is the number of conversions divided by the number of clicks, or the percentage of people that click your ad and then convert. You can use this number to evaluate the quality of your campaigns and website. Is your campaign targeting irrelevant keywords? Are you doing a good job of selling your service or product once you send traffic to your site? Does it provide a good user experience? Is your messaging benefits-focused? All of these factors can very well contribute to your campaign’s conversion rate.
Cost per conversion: Depending on your business’s definition of a conversion, this is either your cost per lead or cost per sale. It is the actual cost that you paid to get that sale or lead. To calculate your cost per conversion, you divide the number of conversions by the money you spent.
Look, I’ll be honest: there’s no way around it. PPC advertising is incredibly complex. There are a lot of numbers, a lot of data, and a hell of a lot of moving parts. It can be intimidating to look at all of these metrics and try and understand what they mean and how they all work together. To run a successful PPC campaign, it takes a solid understanding of the advertising platforms, and like anything else in life, lots of experience.
If you’re interested in running pay-per-click campaigns but don’t want to get your hands dirty, Coalmarch has plenty of options, from PPC-only to full website overhaul and branding. Give us a shout today!