Key performance indicators or KPIs are an integral part of any digital marketing strategy, including PPC campaigns.
Otherwise, as Yogi Berra said, “If you don’t know where you are going, you’ll end up someplace else”. Setting a list of important KPIs, monitoring them, and adapting your pay-per-click advertising strategy is a must for any business.
However, at the same time, there’s no universal list of PPC metrics that fits all companies. The choice of KPIs to follow depends on both the industry benchmarks and your specific marketing objectives. If you don’t apply the proper comprehensive approach to monitor your pay-per-click, vanity metrics may distract you from focusing on the settled business’s vision.
So, let’s view the main KPIs for PPC that are likely to benefit your digital marketing strategy.
Main KPIs for PPC
One of the basic paid search KPIs is impression share, which provides an understanding of how many users saw your ad. The impression share doesn’t require any additional activities of customers, such as clicks. Even though it cannot be an indicator of your campaign success, it’s still critical for counting other PPC KPIs.
How to Calculate the Impression Share
You need to divide the number of impressions your ad received by the total number of impressions your ad was eligible to get.
The impression share also demonstrates your position in the advertising competition. For instance, having 55% of the impression share means that the other 45% belongs to your rivals that also compete for the same keywords. Idyllically, the impression share needs to be as close to 100% as possible.
Average Click-Through Rate (CTR)
The click-through rate (CTR) is on the list of the most critical PPC KPIs. The metric shows how many users clicked on the ad after seeing it. Based on CTR, you may understand whether your target audience assessed your ad as interesting, relevant, and valued. Based on CTR, you may decide whether to pause your PPC campaigns or boost your bids.
How do you calculate a CTR
You need to divide the number of clicks by the total impressions for a certain period.
For instance, if your advertisement received 1000 impressions and 200 clicks, then your CTR would be: (200/1000) x 100= 20%.
Quality score is the metric created by Google to determine the quality of your created ad. It’s generated based on three components:
- relevance of the advertisement;
- click-through rate;
- quality of your landing page.
We’ve already covered major requirements for the ad copy and landing page for a successful PPC campaign.
The quality score varies from 0 to 10. At Promodo, we strive for reaching the highest possible quality score for our customers’ PPC campaigns.
The financial aspect is key. That is why calculating the efficiency of the implemented PPC campaign is a must. You may do this with the cost-per-click (CPC) metric, which demonstrates how much money you spend each time the customer clicks on the ad.
How to Calculate CPC
According to the CPC formula, you need to divide the total cost of your clicks by the total number of clicks.
The benchmark of the average cost-per-click depends on numerous factors, such as industry, country, platform, competition in the chosen keywords, as well as the quality of your ad. For instance, in the graph below, you may see that CPC in search engines is much more expensive in the United States than in Finland.
Average cost per click (CPC) in search engine advertising (SEA) 2020, by country
Conversion is definitely one of the most important paid search KPIs. Motivating your target audience to click on the ad and lead them to your landing page is only half of the job. It’s way more complicated to turn them from leads to paying customers that actually bring revenue to your brand. That is why the conversion rate is an essential metric to consider.
How to Calculate the Conversion Rate
To get the conversion rate, you need to divide the number of conversions by the number of total ad interactions that can be tracked to a conversion during the same time period.
According to Google Ads KPIs, the average conversion rate is 2.35%. However, the metric differs considerably from industry to industry. For instance, the online shopping conversion rate in the health and beauty industry may reach 3.3% when the participants of the luxury handbags niche may count only on 0.7%.
Online shopping conversion rate in selected verticals worldwide in 3rd quarter 2022
Cost Per Action (CPA) or Cost Per Conversion
Going back to the financial aspect of your paid advertising, consider assessing your cost per action or cost per conversion. These PPC metrics allow for determining the efficiency of your paid advertising. Basically, it is the sum of money you pay for each gained customer in terms of the PPC campaign.
How to Calculate CPA
To get the CPA of your pay-per-click advertising, you need to divide the total cost of your conversions by the number of conversions.
Viewing the CPA benchmarks, we can assume that they vary remarkably depending on different factors. Nevertheless, Google Ads KPIs demonstrate that the average cost per action in the search network across all industries is $48.96. However, it may be as low as $33.52 in the automobile segment, and exceed $133 in the technology sphere.
If you target reaching the industry-lowest CPA, it’s better to turn to professionals to arrange your PPC campaign.
Last but not least KPI for a PPC campaign is the average position. Obviously, your position in SERP is highly important in terms of the effectiveness of your paid advertising strategy.
As Google algorithms change often, you need to take into account that you may not get the top ad position even paying the highest. The thing is that Google determines the position of your ad based on the ad rank.
How to calculate the ad rank
To get your ad rank, you need to multiply your quality score by the maximum cost per impression.
However, also keep in mind that you cannot view ad rank or average position separately. It’s better to take the whole picture with other PPC KPIs and additional details to assess the effectiveness of your paid advertising.
Why is It Important to Monitor Pay-Per-Click: Benefits of PPC KPIs
Keeping the Right Focus
One of the core benefits of KPI for paid search is keeping the focus on corporate objectives. PPC metrics is the perfect tool that doesn’t let you distract and keeps the focus on the preliminary settled goals.
Business Adaptation Opportunity
Different businesses have different aims and operational processes. For instance, PPC campaigns for mobile applications and eCommerce have different conversion styles. Due to the specific CPAs (cost-per-action), you can track the metrics that are really informative for your business, such as product sales, signups, filling out the application form, app downloads, etc.
Maintaining Financial Efficiency
It’s critical to get value from any money spent on your PPC campaign. That is why competing for the keyword with competitors, you need to keep your expenses wise. PPC metrics give you a hand with it.
Driving Your Business Growth
In the long run, improvement of the PPC campaign effectiveness that drives business growth is the major benefit of paid search metrics. Isn’t it the key aspect?
Hopefully, you have no questions remaining about whether to track your PPC or not. So, identify your goals, choose proper KPIs for paid advertising, track them properly, and gain benefits from your successful PPC campaign.
Get Help with PPC KPIs!
Leave a Reply