10 AdWords Experts share their top 3 must-check PPC metrics
*This post was originally posted on my personal blog thedigitalrookie.com on 05/10/2014.
Usually, for most of us, when we enter an AdWords account dashboard, we despair in a few minutes because of the amount of PPC metrics available. Metrics that you don’t need to see to evaluate the campaign you’re running, and also metrics you must surely consider KPIs.
Reading through a recent article on wordstream regarding experts’ answers on which top PPC metrics they use in their AdWords campaigns, I asked a few noteworthy Greek Experts that deal with AdWords those two questions:
1. If you could check only 3 pay per click metrics, which would those be? In other words, which PPC metrics offer the most complete image of a Paid Campaign’s performance, and why?
2. Which PPC metric do you consider overrated, and not worthy of note?
*This post, as you can guess, is long, since no answer on AdWords could ever be short 😊. Enjoy:
Antonis Ventouris, Senior Web Analyst, Mindworks
This question hides a trap, since limiting the metrics to 3, will inevitably force you to leave out some.
The logical answer to such a question would be CPA (or ROAS), Cost per Conversion, and CTR.
However, all of the above-mentioned are metrics — metrics are great for relating different-sized entities (campaigns/AdGroups/keywords), and for neutralizing the differences in size, but they are unable to show share, that is how important an entity is and if it follows the 80/20 rule (this way they won’t allow you to prioritize in optimizing the account).
So, my 3 metrics are clicks, conversions (or return), and cost. From these, you can extract any index from 2 broad categories:
1) CPC and CPA/RPC metrics, as well as
2) Conv.Rate.
3) Budget/Conversion shares, which show which entities are those that are the most important to deal with. Time is limited, and you can’t be concerning yourself with something that is simply too small.
Yes, you lose CTR, but I was only allowed 3 metrics, and I wanted impressions. Yes, you also lose IS, but again — only 3 metrics!
Overrated metric: That’s a tough one, since there are many. First page bid estimate, CPM, Average Position, and View through, are all fighting for that spot. I will go with CPM, though, which nowadays is very rarely used as a bidding option (since most advertised parties are interested in direct response) — so we are talking for a “charge” that doesn’t exist (since we aren’t paying with impressions), and can’t offer anything worthwhile to a campaign.
Dimitris Maniatis, Head of RepriseMedia
Limiting the scope to searching, i would note the following ones:
- ROAS (Return On Ad Spend), because the most important metric that shows the account’s profitability, and is of course better than CPA, since CPA forces optimisation to happen based upon averages (average basket, average profit margin, etc.) while each e-shop has different margins for each product. It’s calculated as Revenue / Cost. ROAS’s simple depiction on keywords or AdGroups, in euro, allows me to clearly see the margin regarding how aggressively I can be positioned on bidding.
- CTR, because if it’s high, it shows that the advertised party’s offering is attractive and relevant to the user’s needs, as expressed through the keywords they used. The opposite (low CTR) is a sign that there’s no tight relationship, and there is a possible margin of improvement on the targeting, or even pausing a keyword.
- Impression Share, because I’m a believer in always on regarding searching, so if the impression share is low, it means that we appear to a limited part of people who are searching for the advertised product/service. This leads me to adapt my budget’s allocation, so that my advertised party is visible to the highest possible percentage of the people who are searching for my targeted keywords.
Overrated metric: As the least useful metric I consider average position, in order to attempt moderating the excessive love for Top Position.
Giorgos Konstantopoulos, Head of Search, Mozaik
If I could check only three (3) PPC Metrics on a paid campaign, they would be ROAS (Return On Ad Spend), Cost (the cost of the campaign) and the Conversions number (1-per click). Why these?
ROAS — Most of the campaigns I run have performance as a clear objective, that is maximizing the performance of the money invested in them. A key number, in my opinion, is how many times the budget that was allocated to paid campaigns returns, and that allows the re-investing of part of the excess revenue coming from paid campaigns, in order to create an upward spiral scaling of the account/campaigns, that is essentially “subsidized” by the performance of those very same campaigns.
Cost — The cost spent or about to be spent, initially or for a determined amount of time, is one of the metrics that’s most discussed, maybe more than all the rest. This happens for two main reasons:
a) The money that can be invested in an account/campaign, is related to its performance (ROAS) — as long as there are historic data, or an estimate, of its possible performance, b) with small amounts of money, you can achieve high performance in ROAS, where cost is effective as a metric in how ROAS is affected by increasingly larger amounts that are allocated to a specific paid campaign. The key here is to find the optimal point of balance between invested amount (cost) and performance (ROAS).
Conversions — The number of conversions that happen in a determined amount of time, either resulting to a direct sale, or lead generation, or any other goal (for example, the signing up as a member in a community), is the third metric I “closely” follow. Combined with a high ROAS and Cost, the goal here is to achieve a large amount of conversions. Sporadic conversions, even if they achieve a large ROAS with a “respectable” Cost, lead to a high volatility in the paid campaign’s performance, to uncertainness, and to difficulty in allocating the required resources in short term/medium term planning.
Overrated metric: The metric I consider having an overrated “value” is in my opinion CTR (Click-through rate), for a series of reasons: a) The correct management (optimization) of a paid campaign will “automatically” lead to a high CTR, always in relation to the other participants to the auction. b) A larger focus on CTR and its improving, as an end in itself, not only won’t give the desired result, but will slyly lead to the attracting of lower quality visitors who “invisibly” but constantly eat away at performance (ROAS) of the paid campaign.
Fotis Antonopoulos, eCommerce Director — myshoe.gr
As an eCommerce guy, I’m constantly monitoring about 110 metrics, to have a complete and accurate image of my digital spending’s performance. If I had to choose three, those that I’d say are the first metrics I always observe, they’d be these:
- CPA: It’s obvious that in the very antagonistic digital retail environment, this particular metric… “can make you, or break you.” It’s a volatile metric, that requires constant observation, even in a live feed. Using GA’s API, it was the first we built, in order to constantly track it.
- ROI (and ROAS through Analytics): A good CPA will logically raise ROI. So, if the first metric has a downward trend, but doesn’t translate to a corresponding increase in total ad spending, then this can be a very good first warning chime that there’s more research to be done in the various advertising channels, to see where we’re leaking. On the same time, it’s the aggregate indicator of the Performance of all advertising actions, in their corresponding channels. And as such, of the profitability of the company, or its lack.
- Profit per Impression/Click: A third metric, that in my analysis sequence shows my Performance. If the two above-mentioned metrics are acting proportionally (since a drop in the first leads to a rise in the second), then I am expecting a rise in Profit per Impression/Click. If it shows stability, then it’s another warning bell that my graphic (text/image/video) needs to be changed or refreshed.
Overrated metric: The metrics I consider the most overrated is Conversion Rate. No, I’m kidding, even though we need to have a talk about that as well. In all seriousness, though, the metric I’d say I even mostly ignore is Average Position. In first glance, it rings no bells, since in the huge number of campaigns that are running, very rarely you’d see a change in their total (at first glance), but even if those are observed, the easiest diagnosis would be that a new guy has entered the market and is bidding for position, which we know that will soon stop, when the man who smokes cigars and pays the account sees the first ROIs. Performance Marketing is a very sensitive and mutable environment, which needs long term strategy and investment to show results. Unfortunately, the “roars” of overbidding is a model that we have long seen gives no results. Especially now, when the tool called AdWords has been so fragmented. It only makes our lives harder, in some days’ reports.
Sotiris Alexopoulos, Head of Operations, Warply
The modern marketer is faced daily with the evaluation of his actions, especially in digital marketing where everything can be measured. Even though numbers are the best way to say the truth one wants, there are certain metrics that can’t be ignored. The performance metrics that someone has to focus on are possibly different, depending on the objectives of each action. As such, it’s useful to know what we’re supposed to evaluate, before doing so.
CTR — Click Through Rate Is the metric that aids us in evaluating our first contact with the users, and to come to useful conclusions on the medium used for the campaign’s quality, the effect of our advertising material, or even the users’ responsiveness regarding our product or company. The first impression is indeed important, and through A/B testing, we can optimize the advertising material, its approach, and its targeting, in order to achieve more clicks.
CPΑ — Cost Per Acquisition In simple English, how much does it cost me to get a new customer. A very important requirement for a correct evaluation is knowing how much a customer is worth to us during his lifetime. The rest is simple logic: I never go over this limit. Imagine an airline paying 10€ to achieve a sale that brings in 4€ of revenue. Remember to compare this index for user groups, according to their source of origin, and you’ll be surprised by the difference in user quality.
ROAS — return on ad spent: Is the absolute and most direct metric of evaluation for an action. Similar to ROI, it compares the total cost of an action next to the income generated by it. This metric’s importance is because of the fact that it immediately displays if the action has covered its cost, and aids in calculating its performance if actions are lowered or intensified.
Overrated metric: An overrated CPM??? Truth is that it’s hard to say that an metric is overrated, since any serious examination is a result of study and combination of various indexes. CPM is possibly the only metric not directly connected with performance in sales. It’s still a great metric to measure scope and projection, though it’s still weak in cases where the campaign remains in the information stage.
Giorgos Gkritzalas, Managing Partner, Hangover Media
- CPA: The most important of all. While ROI is positive and CPA is getting better, there’s no dissatisfied party. You enjoy seeing numbers.
- Budget: No Budget, no party. A painful story for most “small and medium” players, that have limited budgets from the outset, and of course, less than ideal results because of lacking testing.
- CTR: The beginning and the end. How many clicks are you getting, compared to the views? How well-written and good for sales, are your ads? How many ads do you keep, and which do you throw away? Are they all doing their job? Everything is in how you “read” a metric.
Overrated metric: Average Position: Not average position in itself, but the hunt for the “first spot,” is especially overrated (and #wastedmoney). Many times, second or third position can have a much better ROI, and give more opportunities for more bids, but the overzealous customer’s pressure leads to many needless and expensive clicks without any reason.
Giorgos Charalampakis, Performance Marketing Manager, Forestview
CPA: Calculating the cost per action (be it a sale, a sign-up, or anything else) lets you know, at any given moment, if your campaign is profitable or not.
CTR: Looking at your CTR, you can understand how good your targeting is, but also the ad’s message. A low CTR can mean bad targeting, that affects the account’s performance.
Impression Share: Looking at the whole metrics group regarding impressions share of a campaign, you can make decisions for its better optimization. Many campaigns, for example, “lose” impressions, and by extension, sales, because of a lower budget.
Overrated metric: Average Position. Personally, it means nothing to me, since the desired results come from a correct cost per action. The position the ad appears in isn’t related to its ROI, which must be the first thing we keep in mind in each account.
Giorgos Dimitriou, Communications & Marketing Director, Skroutz.gr
Each PPC metric’s importance depends on the campaign’s objectives, but if I had to chose 3, then they’d be Conversion Rate, CTR, and Impressions (Reach).
Conversion Rate — it clearly shows you how many clicks of your campaign are converted into actions (for example, sale, sign-up, purchase, etc.), according to the objective you’ve set as the desired result. Through the conversion rate, you can directly judge your communication’s effectiveness, as well as the degree of relevance between content and call-to-action, and the crowd — objective.
CTR — because it defines how attractive your ad is to users, and shows the percentage of the audience who responded to the communication “call”. However, it’s not enough by itself as a metric for judging the performance of a campaign, because you can have a high CTR without any conversion. For example, you can get clicks for all the wrong reasons, or because your message isn’t clear enough. CTR has value as a metric when the campaign adds value to the brand, something that usually is subjective, and the user clicks for the right reason.
Impressions — impressions give a sense of the Medium’s quality and achieved reach, in a specific time frame, with a given budget. If the communication objective is a wider reach, then impressions is a very important index. But if the objective is to achieve a final action, then it should be evaluated in combination with conversion rate.
Overrated metric: in online communication, each metric holds its own importance, and an effective campaign is evaluated by a combination of measurable factors. So, I’d say that there are no overrated or underrated metrics.
Giorgos Achillias, Global Strategy Director, Dentsu Aegis Network
-Quality score
-Click-through Rate
-Conversion Rate
These variables are, in my opinion, the most important variables when designing a ROI campaign.
Overrated metric: traffic from Google Search vs Search Partners
