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Paid Search KPIs: How to Measure and Optimize Your Campaigns

Written By Erdi Bus
paid search KPIs

Numbers give us the data we need to assess the success or failure of our efforts. These are key performance indicators (KPIs), or the chosen value by which we measure the success of an initiative. Based on their key business objectives, each online business has different KPIs. Running campaigns on Google Ads can be confusing, especially if you’re not sure which KPIs to track. However, there are a number of common KPIs that we frequently use in any pay-per-click (PPC) campaign.

Key performance indicators (KPIs) are specific metrics used by businesses to determine how well things are going. Because not all metrics will be relevant to what you’re doing, selecting the right metrics is critical. You can spend hours going over various KPIs and still come up short. Tracking specific Google Ads KPIs can aid in optimizing campaign performance and increasing ROI. As your campaign evolves and your goals shift, you must adjust your Google Ads KPIs accordingly. You can determine how close you are to meeting your objectives by tracking relevant metrics. So, which metrics are the most effective for gauging the success of your paid search campaign? To find out, continue reading our article where we provide detailed information about paid search KPIs and Google search ads KPIs.

Click-Through Rate (CTR)

When reviewing the performance of your Google ad campaigns, CTR is an extremely useful metric to keep an eye on. CTR is simply the number of times people clicked on your ad divided by the number of people who saw your ad in the SERPs (Search Engine Results Pages). When someone sees your ad, they have the option to click on it. Every time they do so, a click is recorded. And when they don’t, it doesn’t count for anything. The percentage of people who click on your ads and visit your website is referred to as the “click-through rate” (CTR). These are the people who were interested in your ad, and a high CTR indicates that your ad is performing exceptionally well.

People will click on your ad for one of two reasons. They were either interested in the text in your ad or your ad was extremely relevant to that specific search query. If your ad copy has a high click-through rate, it means it is relevant and interesting enough to be clicked on. You’re probably wondering if your CTR is too low or too high. Every industry has its own CTR, so you can see how you compare to the competition. If your campaign’s CTR matches or exceeds the CTR of your industry, you’re doing well. If your CTR is slightly lower than the industry average, you should consider updating your copy and experimenting with new verbiage to generate more clicks.

Quality Score

 The Quality Score is an important component of the auction, but it is still a health metric and not a key performance indicator. Google is all about improving the user experience, and this metric contributes to that goal. Google wants users who click on advertisements to find them relevant and of high quality.

This is the deciding factor in your overall performance. Google assigns you a quality score based on the relevance of your keywords, the quality of your ad, and how user-friendly your landing page is. The quality score is assigned on a scale of one to ten, with five being considered average. If your score is lower, focus on improving the quality of your ad copy and landing page.

When your quality score is high, Google Ads will actually offer you a discount on your ad costs because you’ve demonstrated that you’re a trustworthy source of information for Google users. This reduces your cost per conversion while increasing your ROI. If your quality score is a perfect 10, you pay a minimum cost per click for the same keyword. However, if your quality score is low, you will have to pay more to maintain the same ad position for keywords. If your quality score is one, you pay the maximum cost-per-click for the same keyword across all advertisers. Because you have demonstrated to Google that you are a poor source.

impression share

Impression Share

The impression share is the number of impressions you received divided by the number of impressions you were eligible to receive. Your current ads’ targeting settings, approval statuses, bids, and quality determine eligibility. Budget constraints and low ad rank will reduce your impression share, but having a high IS should not be the end goal. If your ads are of high quality, your budget is not limiting their display, and you are bidding on what you can afford, impression share reflects the level of competition you face more than anything else.

Search Impression share is important because it can provide a good indication of why a keyword is not performing well. You have many alternatives for advancement before having to consider pausing a keyword, whether it is increasing bids or daily budget, improving the overall quality of your ad or using search terms to identify new keywords and negatives.

Number of Clicks

This KPI counts the number of people who clicked on your ad. A single click is the first step in any conversion. As a result, one of the most important PPC KPIs to monitor is the number of clicks your ad receives. This obvious SEA metric is critical and serves as the foundation for further analysis because conversions cannot be achieved without clicks. By monitoring the aggregated number of generated clicks in a set time frame and comparing it to the previous period, you can get a good first impression of the main focus of your entire Google AdWords account, specific campaigns, or even individual advertising groups.

If a large number of people click on your ad, you know the messaging is resonating and driving traffic to your page. While clicks are an effective KPI, they should not be the only ones, you monitor. Most businesses’ ultimate goal is conversion unless your goal is simply brand awareness and authority. A click does not always indicate that the customer has completed the buyer’s journey. That is why, in order to truly understand the performance of your PPC campaign, you should track several KPIs.

Lifetime Value (LTV)

Knowing your Customer Lifetime Value (LTV) allows you to make important sales, marketing, and customer fulfillment decisions. To begin with, you should concentrate your efforts on lead generation and lead conversion activities that will help you acquire long-term customers. Second, you’ll want to provide great service and excellent customer support to keep your current customers coming back for more.

To determine marketing success, many SaaS (Software as a Service) marketers now calculate the LTV: CAC ratio. Keep in mind that CAC stands for customer acquisition cost, which is essentially another way of saying CPA.

Cost per Acquisition (CPA)

 The Cost per Action metric tracks how much a company spends to drive conversions for things like a whitepaper download or a subscription. Obviously, the cost of conversion varies greatly depending on a variety of factors, including the industry in which you operate. Other factors that influence your CPA include the design of your landing pages and the level of competition you face.

Cost Per Acquisition differs from Customer Acquisition Cost (CAC) in that it focuses on specific channels or campaigns rather than an average cost for acquiring customers across all channels and headcount. The CPA is calculated by dividing your ad spending by the number of all conversions gained during the same time period.

Keyword Performance

 If you want to be successful with Google Ads, you must review and improve the performance of your account on a regular basis. You’ll want to keep an eye on the status and progress of both your ads and their keywords. You can view and download keyword performance from a specific time period, or you can customize your Google Ads statistics table to track how your keywords perform by match type. Also in search results, You can add keywords that you do not want to show your ads as negative keywords. You can also review your keyword quality score by running a keyword diagnosis.

Remember that the performance of your ads and keywords can vary. Web traffic fluctuates from day to day, and this natural fluctuation may have an impact on the performance of your campaign. Furthermore, current events can have a significant impact on the number of impressions and clicks you receive.

Budgeting

The results we get from the important metrics that we track against the total spending we make for our advertising campaigns contain data about the performance of our campaigns.

The goal of each advertising campaign can be different. For some advertisers, sales are the ultimate goal, while for others, the number of views or clicks is important. For this reason, target KPIs should be considered while advertising budgeting, and a realistic plan should be made.

Bidding

Google Ads provides several bid strategies tailored to various types of campaigns. Which bid strategy is best for you depends on which networks your campaign is targeting and whether you want to focus on getting clicks, impressions, conversions, or views. Choosing a bidding strategy for your Google Ads campaign affects both your goals and your budget. Before you start optimizing with smart bidding strategies, make sure conversion tracking is enabled in your Google Ads account.

Because each strategy performs differently, it is critical to first establish your desired outcome – clicks, impressions, conversions, or views. Manual bidding strategies are the best option for digital marketers who want complete control over their keyword bid amounts. Automated bidding can be set up for a single ad group, a single campaign, or all campaigns for a given advertising account. Smart bidding strategies optimize your keyword bids during the keyword auction by leveraging Google’s artificial intelligence and machine learning capabilities.

conversions agency new york

Conversions

Conversions are at the heart of calculating your True Return on Investment in Google Ads. Conversion tracking will demonstrate what happens after a customer interacts with your advertisement. You can keep track of users who call, buy a product, download a mobile app, and do other things. Conversions allow you to drill down to find out what’s working and what isn’t.

Finally, conversion-related metrics are the most important PPC KPIs of all. Conversions eventually lead to revenue, so ensure that your conversion tracking is in place so that you can track actions and fine-tune your marketing strategy. You should also pay attention to your conversion rate, because the number of conversions you get may seem high on paper, but it may actually be well below what you should achieve based on the number of clicks your ads generate.

Cost per Click (CPC)

 Advertisers pay per click each time a user clicks on an ad. CPC advertising is effective when advertisers want visitors to their websites, but it is less effective when advertisers want to build brand awareness. Since its inception, CPC has grown in market share year after year, eventually eclipsing CPM to control two-thirds of all online advertising compensation methods. If you have a budget in mind before beginning your Google Ads campaigns, you should also be aware of the cost per click, or CPC.

The click-through rate (CTR) cannot be studied in isolation. Specifically, if earning a single link is prohibitively expensive, it is not worthwhile. That is why determining the cost-per-click (CPC) is essential. This PPC metric can help you estimate how much money you’ll spend each time a user clicks on your ad. If your CPC begins to rise over time, it is most likely due to a low conversion rate or quality score. That could imply that you’re not getting high-quality leads from your ads, which means they’re not converting into sales. You’ll have to spend more money on paid traffic while testing ad copy until you find what works and lower your CPC again.

Cost per Mille (CPM)

The term originated in print, television, and radio advertising, but it has also been used in online marketing since the inception of the commercial internet. It calculates the cost for an advertiser to reach 1,000 people in a specific demographic. The cost per mille (CPM) is an important figure that indicates how much money must be spent on an advertising campaign to reach 1000 people in a target group. A lower CPM is preferable because it allows you to reach a larger audience while spending less money. CPM is a bidding method available on some paid advertising platforms that you can use to set up your campaign.

This is directly related to campaign impressions and thus provides a fairly clear picture of your brand awareness. When bidding on ad space, CPM is a good option if you’re running an ad campaign with the goal of increasing brand awareness and engagement. This means you’ll decide how much you’ll pay for every thousand impressions your ad receives. It’s also worth noting that CPM adds value by allowing consumers to see your ad multiple times. Multiple impressions can assist in keeping your brand at the forefront of a consumer’s mind.

Conclusion

 You now have a good understanding of the most important Google Ads metrics. Google Ads metrics, like those in any other area of digital marketing, have no value when viewed separately. Each business and campaign has a unique set of metrics that must be measured. Measuring vanity metrics and tracking irrelevant KPIs will harm the performance of your Google ads. Choose the KPIs that are relevant to their specific campaigns and synchronize them. Stick to metrics that show your progress and avoid vanity metrics that could distract you from reaching your goals. As your company grows, so will your goals and the KPIs you prioritize on your must-watch, must-optimize list.

You can contact us now to determine the KPIs that are important for your business and to create a brand new digital marketing strategy.

Erdi Bus

Erdi Bus

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Digital marketing is a long-term communication adventure and we are with you in this adventure.

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