8 Key PPC Metrics You Need to Understand
Pay-per-click platforms like Google Ads (formerly Google AdWords) can be overwhelming. You can easily get lost in the numbers and graphs. But don’t let the analytical nature of PPC scare you off. This guide will explain in plain English what these eight PPC metrics are, how they are calculated, and what they mean for your campaigns.
Clicks indicate the number of times a user clicked on your ad to visit your website. A PPC platform like Google Ads charges you a fee (see cost per click) each time this happens.
A high number of clicks may seem like a worthwhile goal, but it’s not necessarily a good thing. Read what I mean by that here.
Impressions indicate how many times your ad was served.
Note that I said how many times your ad was served and not seen. An impression doesn’t necessarily mean a human user saw your ad. Your ad might be placed below the fold, meaning the user would have to scroll down the screen to see it. Even if he never scrolls, it still registers an impression. Read more about Average Position below.
Click-through Rate (CTR)
Click-through rate, abbreviated CTR, is the percentage of times your ad is clicked.
CTR is calculated by dividing the number of clicks by the number of impressions. So if your ad was served 100 times and 2 people clicked on it, your CTR would be 2%.
The first ad displayed on the SERP is in position 1, the second ad at position 2, and so on. Lower positions may mean your ad only shows when a user clicks on the second or third page of Google results. Each time your ad is served, its position is averaged to calculate your Average Position.
It’s important to note that Ad Position is not absolute. Google research showed that if the SERP always looks the same, users’ eyes become trained to ignore the ads. In response, Google serves a dynamic layout that changes with each search. Sometimes the SERP shows only one ad at the top of the organic search results, with the other ads served below. Other times, two ads show up top, or maybe three. Sometimes it won’t display any ads on the top, only on the bottom. Suffice it to say that the closer your Average Position is to 1, the higher on the page your ads were served. A higher ad position will generally bring more clicks to your ad.
Cost Per Click (CPC)
The maximum CPC bid (sometimes called max. CPC) is an amount you set as the highest you’re willing to pay for a click. Your actual CPC (meaning the final amount you pay for an individual click) may be less than your max. CPC bid. You have the option to choose manual bidding, where you set the maximum bid amounts, or automatic bidding, where Google sets the bid amounts for you to try to get you the most clicks within your budget.
Cost (Ad Spend)
Cost is how much you’ve spent on your ads. You might look at cost across your whole account (sometimes referred to as ad spend), in a campaign, or for an individual keyword. To calculate your cost, multiply your average CPC by the number of clicks.
A conversion is an action a user takes after she has clicked on your ad. This action is defined by you using a tool called conversion tracking. Conversions might include an e-commerce sale, a newsletter subscription, a file or app download, or a phone call.
Cost per conversion
The cost per conversion is calculated by taking your cost and dividing it by the number of conversions.
Cost per conversion is an important PPC metric to ensure your campaigns are delivering a return on investment (ROI). However, remember that conversions are not always direct sales. Take into consideration how much a conversion might be worth to your business. When you set up conversion tracking, you have the option to assign a value to a conversion, such as collecting an email address.
PPC metrics: Just the beginning
These eight PPC metrics only scratch the surface of what you can analyze in your campaigns, but they are an important place to start.
As you examine your PPC metrics, try not to look at any single metric in isolation. Rather, take these eight insights together and piece together a fuller picture of how your campaigns are performing. For instance, you might see a high CTR and think that’s great. But if that CTR only brought your campaign a few clicks, you may need to re-evaluate.
For ongoing tips about Google Ads and how to understand PPC metrics more deeply, read my book 3 Expensive Google Ads Mistakes (and How to Avoid Them).
Originally published at charlesavemktg.com on July 30, 2018.