KPI’s are the marketers best friend. Why do I say that KPI’s (Key Performance Indicators) are your best friend? I say it to stop anybody who is new to PPC Marketing falling into the impression and click black hole. A black hole where your money will disappear very fast. New PPC marketeers often mistake high impression numbers and a high number of clicks as a successful campaign. Sadly nothing is further from the truth. That sort of campaign only benefits the platform you are advertising on. In this post, I will tell you about the Key Performance Indicators (KPI’s) that really matter and the ones you should be looking for.
Firstly, let’s look at a few simple definitions for terms we will be using later.
Impressions are our starting point. This is the number of times your advert appears in front of prospective customers. Without any impressions, you stand no chance of a successful campaign but it is not an indication of success
Clicks are the next number we need to look at. A click is when somebody views your advert and then clicks on it (not rocket science).
Acquisitions / Conversions
This is a when a visitor performs a predefined task such as a purchase, email signup, telephone call etc.
Now let’s take a look at the first of those all-important KPI’s
Click through Rate (CTR)
Click Through Rate is key to measuring the success of our campaign. CTR is defined as the total number of clicks divided by the total number of impressions. CTR’s tend to be in the region of 2-6% depending on which sector you are operating in. There is plenty of data on the internet to allow you to discover what an average CTR for your sector should be. A CTR below this will require further investigation. It could be that your ads need a little more work or maybe your keywords need tightening up. Whatever the reason for your low CTR you need to get it sorted. Not only does it directly impact on the effectiveness of your campaign it also effects other KPI’s that we will see later.
CTR is a valuable tool to allow you to draw a direct comparison between different ads and different campaigns. If ad A has a CTR of 4% but ad B only 2% for the same search terms you can start investigating why this is so and make any changes necessary. Please remember there is no perfect CLR for your campaign and a high CTR does not necessarily lead to a successful campaign.
Cost per Click (CPC)
CPC is a very basic KPI that tells you how much you are spending with your platform provider each time your ad is clicked. It is simply the total cost of the campaign divided by the number of clicks it received. In its rawest form, there is not much you can do to influence it during the early stage of a campaign. However, as your campaign progresses other KPI’s will come into play that do directly affect your CPC which is why you need to keep a very careful eye on this one.
Cost Per Acquisition/Conversion (CPA)
Your CPA is another simple KPI that helps you fine tune your campaign. It is simply the total cost of the acquisitions divided by the total number of acquisitions. With this data, you can identify your most profitable ad groups or campaigns and adjust your budget accordingly. It is also very useful for planning the budgetary requirements of future campaigns.
Conversion Rate (CVR)
Your CVR is one of the most important KPI’s you can measure. It is an all-around indicator of if your whole marketing campaign is going well.
Your CVR is the number of clicks divided by the number of conversions and is expressed as a percentage. A CVR rate of 5% would be 5 conversions for every 100 clicks.
There is very little point in having hundreds or even thousands of people clicking your add and then clicking straight of it again.
If you only remember one thing remember this
Clicks are vanity: CVR is sanity
If you are getting a healthy number of clicks but your CVR is low there may be a number of possible reasons. My first port of call would be the landing pages or pages for the campaign. Are they sufficiently targeted, do they have appropriate well structured CTA’s, are they what the visitor expected to see? Landing pages are crucial to a good campaign. Bad ones will kill it stone dead so often it is better to have your Landing Pages professionally built. Not only that a bad one will have a negative effect on your quality score. Your quality score is determined by such things as your CTR, landing page experience and ad relevance to the search. A good quality score of 7 or above will see your CPC and CPA go down and a bad one, 6 or less will see it go up.
So there you have my top 4. Of course, there are many others and you can use as you gain more experience with PPC campaign building. You may also find you start developing your own if there is a specific metric you wish to measure. For the time being though stick with mine. They will give you maximum conversions for minimum cost. Happy days.