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How To Assess Paid Advertising Performance

Digital Marketing
August 23, 2019
9 min

Paid advertising is one of the best channels for attracting a relevant audience to your website. However, almost to every second marketing specialists, it’s merely a waste of money.

This may look like users click on your ads and navigate to your website without you spending lots of money. The opposite is also true: you pay money, but you get no leads. In both cases, you might not be able to understand what’s going on if you don’t analyse your advertising campaigns.

Most entrepreneurs, marketers and targeters find this almost impossible to immediately attribute sales to their marketing results. You need numbers.

According to the AdEx Benchmark Study 2018 covering the state of the digital advertising market in Europe, the amount of digital ad spends in Ukraine in 2018 was 475 million euro and increased by 26.9% year-on-year.  Ukraine’s digital ad market was the fastest-growing in Europe. In particular, the country’s search growth rate was 25% — this is a sure sign that businesses are actively collecting paid search traffic.

Having your PPC ads set up properly is half the success. You need to regularly test their performance and work on improving it.  And to know what exactly you should improve in the settings of your PPC ads and how you should do this, you need accurate test data and performance evaluations.

Why should you analyse ad performance?

PPC search ads in Yandex.Direct and Google Adwords are text blocks that appear when a user enters a certain search query. PPC advertising will allow you to get above the search results for a relevant query if top positions aren’t available to you at your current stage. By placing an ad, you only pay for clicks and your users can easily find what they’re looking for.

There are many reasons why you should analyse your advertising performance, to name a few:

  • You are investing money. This would be nice to know how this money is spent and what your return on investments. With that, you’ll be able to reallocate your marketing budget to more cost-efficient customer communication channels if needed.
  • Without proper evaluation, you risk pouring your money down the drain without proper return, for example, by setting up your PPC advertising campaign incorrectly or entrusting it to the hands of an incompetent person.
  • It’s difficult for businesses to configure effective contextual advertising on the first try. You need to create hypotheses, check them, and make adjustments based on the obtained data.
  • You’ll be able to get feedback from your audience and get a better understanding of their interests and needs.

The main analytics tools are Google Analytics and Yandex.Metrica. Even if you don’t use paid advertising channels, these systems can always provide you with access to data about traffic sources and the number of visitors to your website, user behaviour on the website, scroll depth and session duration, exit rates and much more. UTM tags and call-tracking are also often used for analytics purposes.

Where’s my traffic? 6 common mistakes in ppc ad analysis

PPC analysis is about more than checking CTR rates once a week and making conclusions. As well as checking a few sessions on Webvisor won’t give you a complete picture of why visitors leave a page without making a purchase. A single ad won’t bring you all potential customers in the niche from the first iteration. To find out whether you’re getting traffic and discover the reasons why there’s no traffic, you should evaluate the efficiency of your advertising efforts. This is one of the most difficult stages in the marketing process.

Here, marketers tend to make many kinds of mistakes, such as:

  • not setting up analytics systems, without which it’s impossible to track clicks, bounce rates and user interactions with a web property;
  • installing Yandex. Metrica and Google Analytics counters without configuring them in Yandex.Direct dimensions or pulling them into Google Ads;
  • not setting up goals or adjusting them to business objectives;
  • not tracking the most important visitor interactions and measuring the performance by only the number of clicks;
  • not analyzing the structure of advertising campaigns, which makes it impossible to identify effective keyword groups;
  • only using conversion rates as a basis for building their marketing strategy.

As a result, analytics systems fail to correctly track the completion of your advertising goals (even if you’ve set up goal tracking), get correct data about conversions. You waste your budget, and this is impossible to understand how many leads a particular channel generates, not to say optimise its performance.

Daily bid adjustments, testing audience groups, testing different formats and content of your PPC ads, analysing the ROI of the ads, accounting for purchase returns and repeat sales are only a few of the KPIs that you need to consider in order to understand whether your advertising makes profits. Below, we cover these KPIs in more detail.

The KPIs you need to analyze your PPC ads

Analytics services provide a range of behavioral metrics that demonstrate current data on the performance of your ad campaigns, the relevance of the traffic, and the appeal of your offer. The following metrics are already calculated by the service.

  • impressions — the number of impressions for your ad;
  • clicks — the number of times visitors have clicked on the ad to land on your website;
  • visits, or sessions — the number of visits in which users interact with your website;
  • average session duration — the average amount of time a user spends on your website;
  • pages per session — the number of pages a user has browsed through during a session;
  • bounce rate — the percentage of visits during which users have left a webpage without making any interactions within 15 seconds.

In Google Analytics, the reports on these KPIs are available in the Acquisition — All Traffic — Channels and Source/Medium reports, as well in the Acquisition — Campaigns — All Campaigns. In Yandex.Metrica, the KPIs are listed in the Yandex Direct — Summary report.

Google Analytics traffic channels

There are 4 business-centric KPI:

  • CTR (Click-through Rate) is the ratio of the number of clicks to the number of impressions, in other words, the clickability of an ad. It allows you to evaluate which ads drive traffic and see their performance based on the variety of criteria, including region, placement, day of the week, keyword group and UTM tags.
CTR formula

CTR = number of clicks / number of impressions * 100%

  • CPO (Cost-per-Order) / CPA (Cost-Per-Action) is the cost required to acquire a single interaction or a target action, such as an order or registration, across all marketing channels.
CPO formula

CPO = advertising costs / the number of orders

  • CPL (Cost-per-Lead) is the cost of acquiring a single lead, that is, a user who’s taken a certain action.
CPL = advertising costs / the number of leads

CPL = advertising spends / the number of attributed leads

  • ROI (Return on Investment) shows how profitable or unprofitable the advertiser’s investments in contextual advertising at this stage are. If this rate is is more than 100%, your investments are profitable. An ROI of less than 100% would mean you’re losing money.
ROI Formula

ROI = profit – investment cost / investment cost * 100%

Let’s take a particular look at the conversion rate, that is, the ratio of visits in which users have taken a target action (such as, making a call, filling out a form, or using a chat window) to the total number of visitors. Google Analytics shows conversion-related metrics in the ‘Conversions’ column. Yandex.Metrica lists this data under ‘Goals reached’.

Goal conversion rate google analytics

Conversion rates are calculated by the following formula:

CR formula

CR = The  number of target actions / The number of visitors * 100%

All the indicators can be tracked in your accounts. This will give you the latest data on the efficiency of your advertising efforts and enable you to analyse this data over time, using your selected criteria.

You might be interested: 5 Tips On How To Optimise Your Google Shopping Campaign

What's next?

Analytics enables you to strengthen your ad campaigns, decrease bids for underperforming campaigns and scale up the efficient ones. By auditing your PPC ads, you’ll be able to:

  • Track the KPIs over time and understand whether your marketing efforts are moving the right direction.
  • Evaluate the CTR, bounce rates and conversion rates for different keywords and see which of the keywords are relevant to your offer and which can be ditched to save your advertising costs:
  • Track your traffic by the number of bounces and use negative keywords to prevent your ads from being shown for irrelevant search queries.
  • Improve the form and the content of your ads so that their content and the headline are relevant to the search queries. This way, you’ll improve the clickability of your ads and decrease the cost per click.
  • Reduce the average customer acquisition cost and maximise your reach at minimum cost.

Paid advertising has obvious advantages — it’s a very efficient and precise tool that requires analytical and creative skills. The proper analysis makes this possible to uncover the strengths and weaknesses of a campaign and make timely adjustments. Run a PPC advertising campaign and make sure to assign the budget and time to collect feedback. Collect analytics data, make calculations using the formulas and assess the situation. With some time and experience, you’ll be able to adjust everything so that the cost per click decreases and the conversion rates increase.

However, remember that in this case, analysing data reports is not something that is worth devoting all your time. This is much more important to tailor your advertising campaigns to the interests of specific users. Then, these will be the campaigns that will drive traffic, clicks and purchases.

Written by
Sergiy Lomanenko

PPC Team Lead at Promodo

Serhiy has been engaged in PPC for more than 8 years.

Worked with many top Ukrainian clients.

Now manages his own team.

August 23, 2019
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