AdWords uses several metrics to analyse the performance of an account. There are so many factors to consider when looking through the data and interpreting it. Without going into the advanced metrics there are a few key metrics you should use every day to ensure your account does not overspend, underspend, underperform and bringing irrelevant traffic.
1. Cost Per Conversion (CPA)
The cost per conversion is a calculation for how much it costs to achieve an action such as a purchase, filling in a form on the website or a subscription.
CPA= Total Costs/Number of Conversions
It’s a crucial component of any marketing campaign. Lowering your cost per conversion is important if you want to get more conversion out of your budget and this can be done in several ways.
In basic terms, if you spend £100 on advertising and receive 100 visitors and only 2 of them convert, your cost per conversion will be £50 as this is the amount it took for someone to convert.
2. Click Through Rate – (CTR)
Personally, I would say that CTR has the biggest affect on AdWords and is the go-to metric that tells me how the account is performing. A high CTR leads to a higher quality score, which in turn, reduced the cost per click and increases the volume of the account.
When optimising AdWords for a better CTR, you can:
– Adding ad copy variations.
– Adding site links.
– Adding other ad extensions.
– Making sure that keyword targets tightly match all the ads in the adgroup for bold highlighted text.
A percentage over 2% CTR is considered good, and anything below this is not so good. We work out the CTR by Impressions/Clicks which gives a percentage of people who saw your ad and then clicked through to your website.
3. Quality Score
If you’re trying to master PPC and running AdWords, then quality score is a major component in getting on Google’s first page and a higher position. It provides an overall number out of ten of relevancy of the keywords and ads and is also used to determine your ad rank by multiplying the cost per click by your maximum bid. Your quality score has several components:
• CTR
• The relevance of your keywords to its ad group
• Landing page relevancy
• Ad text relevancy
It is impossible to know every factor of quality score because it is such a key element of AdWords that determines the level of the account performance. But we do know that click-through rate is the most critical component. If people are clicking on your ad, it is an indication that your ad is relevant to what the user is searching for. Accordingly, Google rewards this with high ad ranks and lower costs.
4. Search Terms Report
The search terms report is a way to see new search terms made by users where your ad has appeared. It’s an opportunity for new keywords and an even bigger opportunity for adding negative keywords to help reduce irrelevant traffic. Adding negative keywords will help to save your money as you won’t be receiving clicks from irrelevant searches that are costing you money.
If you have a big budget in AdWords, this is an imperative component to consider if you wish to keep your traffic specific to the service or products you offer as some searches can be costing high amounts of money and the search term is entirely different to the service you provide.
This can be found in the Keywords Tab – Search Terms
What’s the difference between a search term and a keyword? A search term is an exact word or set of words that a customer enters when searching on Google.co.uk or one of our Search Network sites. A keyword is a word or set of words that AdWords advertisers create for a given ad group to target your ads to customers.
