Almost every industry uses key performance measures, or KPIs, as a measure for how well something is or isn’t performing. KPIs can be used in PPC to evaluate the effectiveness of your campaigns.
Understanding the main performance objectives of a campaign from the very beginning is critical for those employed in PPC. During the campaign planning process, the target of each PPC campaign should be aligned to various KPIs.
Knowing what you want to do in your campaign and how you’ll calculate it allows you to set up Google Analytics and Google Ads ahead of time, ensuring you’re tracking performance properly from the beginning and ensuring the accuracy of your campaign data.
The best way to show ROI to both your clients and your boss is to properly assess the effectiveness of the campaign.
The following are the five most important PPC KPIs to monitor:
#1. Number of Clicks
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A single click is the first step in any conversion. Therefore, one of the most significant PPC KPIs to watch is the number of clicks your ad gets.
The number of clicks is a strong early indication of a campaign’s progress. If a large number of people click on your ad, you know the message is getting through and driving traffic to your website.
Though clicks are an important KPI, they shouldn’t be the only one you track. If the target is merely brand recognition and authority, most companies’ ultimate goal is conversions. A click does not necessarily imply that the customer has completed the buyer’s journey. To truly understand the success of your PPC campaign, you should monitor several KPIs.
#2. Average Click-Through Rate (CTR)
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The click-through rate (CTR) is another important metric for evaluating the effectiveness of a PPC campaign. Instead of focusing only on the number of clicks, CTR compares the overall number of clicks to the number of viewers who see the ad.
CTR is calculated by dividing the total number of clicks by the total number of impressions (people who saw your ad whether they clicked or not). Your CTR will be 10% if you had 2,000 impressions and 200 clicks, for example. The click-through rate is useful because it puts the number of clicks into account.
Since there is no such thing as a “great” click-through rate, there are websites that have recommended benchmarks. They differ depending on the market and other factors. The travel market, for example, has a CTR of 4.68 percent, while technology commercials have a CTR of 2.09 percent.
Over time, keep an eye on the overall CTR. Improve your advertisements frequently to see how you can improve your CTR. The higher the number, the better!
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Increased sales are most often pursued with the longer-term, bigger-picture target of increased revenue in mind.
When purchase monitoring is introduced, this is simple for eCommerce businesses to monitor alongside sales. Advertisers who monitor their data via the offline sales process may still capture this information.
Marketers with differences between their online presence and their offline sales process, on the other hand, could need to extrapolate this data using estimated sales data and average order values.
And even if the figure is extrapolated, having a rough understanding of how advertisements affect the bottom line is useful if that is the campaign’s target.
#4. Return on Ad Spend (ROAS)
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To take things a step further, keep an eye on sales as a ratio to ad spend.
The return of ad spend (ROAS) is determined by dividing revenue by ad spend.
This parameter can be used to determine whether your ad spend is delivering the expected value – especially as your campaigns continue to expand.
#5. Cost Per Acquisition (CPA)
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Another budget-tracking KPI is the cost per acquisition (also known as cost per conversion). Instead of monitoring cost per click, it calculates the cost of acquiring a new client and closing a deal.
The cost per acquisition (CPA) is calculated by dividing the overall cost of the campaign by the total number of conversions generated.
The cost per acquisition is a useful KPI for cost management. For eg, if your gross margin on a product is 10% and your CPA is 15% of the product’s price, it is not cost-effective to keep the campaign running. Either lower the cost per acquisition or put the campaign on hold.
Paid search advertisements aren’t intended to go live and be forgotten. You’re wasting money on your PPC campaigns if you don’t review their efficiency frequently. Keep an eye on these important PPC KPIs to learn how your ads are doing, where you can change, and how to get more value for your marketing budget!