Top Adwords Metrics to Measure Campaign Performance
So you set up a Google Ad campaign (good on ya!) but then Google dumps a whole lot of metrics on you. Suddenly you’re drowning in CPCs, CPMs and CTRs. Which metrics should you focus on in order to have a successful campaign? Which ones really matter? And which aren’t worth your time? Knowing the answer to these questions is a pretty big deal. Focus on the wrong metrics and you could end up making some pretty poor business decisions. Focus on the right metrics and you could open up a more profitable future for your business. Analysing your ad campaigns can feel overwhelming, but if you know which paid search metrics actually count for something, it’ll be that much easier to manage. That’s what we’re going to help you get your head around today. But first, a little background info for those who aren’t so familiar with Google Ads.
What is Google Ads?
Most of us know how popular and powerful Google is. I mean, just considering that every second there are about 2.3 million searches is a mind-blower. Google Ads (previously known as Adwords) offers businesses a chance to tap into that enormous audience potential and get relevant, qualified traffic to their website. Campaigns are how you organise groups of similar ads. Each campaign you make should be centred around a goal, which is basically the main thing you want your campaign to achieve. For example, your goal could be to make sales, get people to sign up to a newsletter or simply increase your website traffic. There are a number of different types of Google Ad campaigns that you can run including Google Search, Google Shopping and video advertising on YouTube. You’re probably familiar with ads that appear in the search results on Google.com, but depending on the type of campaign you run, your ads might appear in different places across the 2 million other websites in the Google Display Network.
How Do I Create an Adwords Campaign?
Google Ad campaigns are created in your Google Ads account. It’s a free account and super easy to set up, especially if you already have a Google account. Once you’re on the Google Ads website, simply click “Start Now” and it’ll walk you through a number of steps to get your ads up and running. If you’ve already created your ad copy and/or images, set up will take less than 10 minutes. What’s a little more tricky is knowing how to optimise your ads, track their success and avoid all the pitfalls along the way. Running successful Google ad campaigns can actually be harder than it seems, and that’s why a lot of businesses seek the help of a trusty digital marketing agency.
Are Google Ads Worth It?
Google Ads are pay-per-click ads which means advertisers only pay Google when someone actually clicks on their ads. Compare this to other advertising models where you might be paying for people to just put their eyeballs on your ad. But if you don’t get a click on your Google ad? You don’t pay. This isn’t the only benefit of Google Ads. Another biggie is that most people who use Google know what they’re looking for when they type their query into the search bar. In fancier terms, on Google there is ‘searcher intent’. Think of it this way: I want some fancy linen sheets and I type that into Google. Your ad for fancy linen sheets pops up. When I click on it, I already have the intent to buy fancy linen sheets. You’ve just got a lead which is more likely to buy your fancy sheets than if your ad popped up in front of someone who wasn’t even considering buying new sheets. If you need results fast, Google Ads might be a good strategy for you. Unlike SEO, which is focused on long term organic conversions, Google Ads can be an effective way to get the clicks you need now. Of course, one is not really a substitute for another and the ultimate pair would be to have both online advertising and a robust long-term SEO strategy. Finally, a pretty huge benefit of Google Ads is the amount of metrics and data you get access to. Every time you run an ad campaign with Google, you automatically get a whole range of tools to measure and analyse how successful your campaign is. With access to search and display advertising metrics, you can monitor what’s working and make sure your money is being invested effectively. “Slow down!” I hear you say. “With all these ad metrics, how do I know which ones I should be paying attention to?” Good question. If you start focusing on the not-so-important metrics, you might end up making poor decisions with your money. But if you hone down on the key metrics, you’ll be able to effectively refine your campaigns, and bring in the big bucks. Let’s take a closer look at the Google Ad metrics that really count.
The most important Google Ad Metrics
- Return on Advertising Spend (ROAS)
- Cost per Conversion (CPC)
- Conversion Rate
- Cost per Click (CPC)
- Click Through Rate (CTR)
- Quality Score
- Impression Share
Read on to learn more about each of these metrics, including what benchmarks you should be looking out for in each case.
1. Return on Advertising Spend (ROAS)
Return on Advertising Spend measures how much money you get back compared to how much money you spent on the campaign. It’s a pretty neat way to see if the campaign is successful.
How to Find ROAS?
ROAS is calculated by dividing how much you spent by how much money the campaign brought in. ROAS = $ spent on campaign / $ received from campaign Knowing how much you spent on the campaign is pretty simple, but calculating how much money came in from the campaign is more complex. You’ll need to know where your customers or leads came from. Was it the ads? A referral from a friend? A social media post? To get even more complex, someone might have initially gone to your website from a Google ad, but didn’t purchase anything until they responded to a social media post. Now you have to ask yourself: does the money they spent get attributed to social media or your Google Ads campaign? There’s no hard and fast answer. It’s something you and your team need to decide based on what works best for your business.
What’s a good benchmark for ROAS?
For ROAS, positive is good. A negative ROAS means you spent more on your ad campaign than what came in from leads and sales. Unless your goals are to grow an audience or increase brand awareness, a negative ROAS usually means your campaign didn’t do too well. Many people will suggest 4:1 is a good ratio for ad revenue to ad spend. However, picking a one-size-fits-all benchmark is not ideal as ROAS tends to differ depending on factors such as your industry, business size and type of product/service. A good test is to compare the ROAS of your ad campaign to other channels of income. If it’s significantly lower, you might need to change tactics. If it’s much higher, you’re doing something right!
2. Cost per Conversion
Simply put, cost per conversion is the amount you spend every time a ‘conversion’ happens. In the world of Google Ads, conversions have many different faces. When you set up your campaign, you decide how you will define a conversion. It could be when someone purchases a product, if they sign up for your newsletter or if they submit a contact form.
Source: Search Engine Journal
What’s a good benchmark?
Every campaign has different goals, so it’s pretty hard to give a standard benchmark for cost per conversion. To show you what I mean, let’s consider two imaginary companies. Company A runs an ad campaign which aims to get people to sign-up their emails. Let’s say they spend $50 for each sign up. Company B runs an ad in which they want people to buy a $500 product. Let’s say they spend about $250 for each conversion. You can see that company A has a lower cost per conversion, but company B is actually seeing a $250 return on investment. So they’re not really comparable. To get a better benchmark, you might be better off comparing the cost per conversion of your ad with similar ads you have in other marketing channels.
3. Conversion Rate
Conversion rate tells you how many people that clicked on your ad go on to do the action you want them to. It’s the go-to metric when you want to know if your landing pages, keywords and ad copy are doing their job properly. If you’re converting a high proportion of people who click on your ad, then that’s great! If your conversion rate is pretty low it’s probably an indication that your landing page, keywords or ad copy need some work. A low conversion rate can also indicate that you’re targeting the wrong audience.
What’s a good benchmark for Conversion Rate?
Traditionally, a conversion rate of 2% to 5% is considered a good benchmark. However, as mentioned above, this might not be the case for every ad campaign. Afterall, it depends on how you define a conversion. For example, people are probably going to be more willing to sign up their email than hand over $500. That means conversion rates for signing up to an email list are likely to have a higher benchmark than conversion rates for the sale of very expensive products and services.
4. Cost per Click (CPC)
How much are you paying for each click you get? That’s cost per click. Every click you get on one of your ads represents engagement or attention from someone who is interested in what you offer. In other words, as an advertiser, you’re buying this attention. CPC is important because it’ll determine how much you end up paying for Google Ads and whether or not it’s financially worth it for you. A click doesn’t necessarily result in a conversion, so it’s important to focus on the quality of the traffic your ads are bringing in. In other words, your ads should target clicks that are both inexpensive and valuable.
How to lower your CPC?
Some people think CPC is useless as it hardly changes. However, over time well-optimised campaigns should lead to a lower CPC without compromising on the value of your clicks. Two key factors that help in lowering your CPC are raising your Quality Score and managing your reach effectively. We’ll talk about Quality Score a little later on, but just know that a higher Quality Score contributes to decreased CPC. Expanding your reach using new and relevant keywords can improve your CPC, and applying negative keywords effectively also plays a role.
What’s a good benchmark for CPC?
Here I’ll refer you to a great resource by WordStream which breaks down the average CPC by industry. If your average CPC is higher than the relevant industry benchmark, you might be paying too much. Take it with a grain of salt and keep in mind that trends vary over time.
Source: Word Stream
5. Clickthrough Rate (CTR)
Clickthrough Rate is the metric which tells you how many people who see your ad are actually clicking on it. Naturally, you want a higher clickthrough rate. However, things get trickier when you take into account that Google Ads are pay per click (PPC) ads, which means you pay everytime someone clicks on your ad. What happens if a lot of people are clicking on your ads, but a good chunk of them are unqualified clicks that won’t convert? That’s called a waste of money! Ad copy should aim to improve the rate of qualified clicks, and discourage unqualified ones. The reason why CTR is a good metric to keep your eye on is that if it gets too low, your ad’s Quality Score could be affected. We’ll touch on this more below, but a low Quality Score can significantly affect where your ad ranks and if it shows up at all. That being said, in some cases you might actually expect and be ok with a lower CTR. For example, if your company is trying to infiltrate a market with a new product, you’re very likely to get a lower CTR than a company who is running a straightforward campaign with a standard or recognisable product.
What’s a good benchmark for CTR?
Again, I refer to WordStream’s resources. If you can get up to 4-8%, that’s a pretty solid CTR.
Source: Word Stream
6. Quality Score
Quality Score is essentially how Google rates the relevancy and quality of your keywords. Each keyword in an advertiser’s account is given a score from 1 to 10. This score is calculated on a number of factors: ad relevance, CTR and landing page experience. To find your ad’s Quality Scores, you can add it as a column in your Google Ads dashboard. Quality Score is important because it helps you keep your ads and landing pages relevant. This will lead to more conversions, and therefore a more successful ad campaign.
What’s a good benchmark?
Aim for between 7-10. Any lower and you risk your ads not showing up.
7. Impression Share (IS)
Want to know how often your ads are showing compared to how often they could have been shown? That’s what Impression Share tells you.
What are Adwords impressions?
An impression is basically when your ad is shown. Each time your ad shows up on the Google search results or on another site on the Google Network, it is counted as one impression. If your ad isn’t showing, it could be due to rank or budget issues. Perhaps Google is prioritising other ads that it thinks searchers will be more interested in than yours. Alternatively, your budget might be more limited than other ads, meaning they show up instead of yours. Impression Share is helpful for identifying a problem. It’s critical to know why your ad didn’t show so that you can make the appropriate changes and get it back in sight of potential customers ASAP. To keep an eye on these, you can add Impression Share, Lost Impression Share Due to Budget and Lost Impression Share Due to Rank by adding them to your dashboard in your Google Ads account.
What’s a good benchmark?
If your impression share falls below 70-80%, it’s time to check out what’s going wrong. If it’s due to budget, there’s not really a benchmark as you can’t do much if your resources are limited. A loss of impressions due to rank about 20-30% should be addressed as soon as possible.
If you’re the kind of person with the time and patience to learn, you could actually manage a lot of your online marketing yourself. There are plenty of great free digital marketing tools out there to help businesses create a successful online presence. That being said, seeing success in these areas can be hard work and outright overwhelming. If you would like help creating killer Google Ads campaigns, or establishing an SEO strategy that gets results, we can help! We’re a digital marketing agency that specialises in SEO, web development and Adwords management in Perth. Why not give us a call and see what we can do for you?