Are you using Google Ads effectively? Do you know how many clicks each ad gets? What keywords do you rank well for?
There are tons of great free tools available to help you track your ads, but most of these tools only provide basic information. To ensure your advertising dollars are being spent wisely, you need to get granular with your data.
In this post, I'll go over 8 key metrics that will tell you whether your ads are working or not. These metrics include CTR, CPC, CPA, ROAS, and more.
I'll also share a few tips on how to analyze your data even further to find out exactly why certain campaigns aren't performing as expected.
Table of Contents
The first metric we want to look at is impressions. This tells us how many times an ad was displayed in the last 30 days. If you're running paid search ads, then you can use this number to determine if your budget is going towards high-quality traffic or low-quality traffic.
If you have a large budget, you're likely paying for both high-quality traffic and low-quality traffic. However, if you have a small budget, you may only be able to afford one type of traffic.
If you notice an increase in impressions, it could indicate that your ad quality is getting better. An increase in impressions could also occur if you’ve increased your bid or improved your ad copy.
However, if you notice a decrease in impressions, it could mean that your ad quality has gotten worse. You might want to consider revising your ad copy or lowering your bids.
Next up is clicks. This tells you how often someone clicked on your Google Ads. If you're getting very few clicks, then you may want to lower your bids so that people click on your ads more frequently.
Clicks are one of the most important metrics to understand because it tells us how effective your ads are. If you have 10,000 impressions but only 200 clicks, you know that your ads aren't converting well. You might try changing your keywords, bidding strategy, or even adjusting your landing page. But if you're still seeing low conversion rates, there could be another problem.
However, if you see lots of clicks, you can increase your bids to attract more attention.
Finally, let's talk about the cost. Cost refers to how much you spend per click. If you're spending $0.10 per click, then you're doing pretty well. But if you're spending $1.00 per click, then you may want to take a closer look at your bidding strategy.
You may be paying too much for clicks. Or maybe your landing page isn't converting well. Either way, you can improve your results by adjusting your bids.
Now that we've talked about clicks, let's move on to cost per click (CPC). CPC is similar to cost except that it measures how much you pay per impression instead of per click.
Every time a user clicks on one of your Google Ads, you pay Google a specific amount of money. This is called cost per click or CPC, and it’s an important metric to track if you want to optimize your campaigns. While many factors go into determining how much you pay per click, here are some things to keep in mind.
CPC means “cost per click”, so the formula for it is as follows: CPC = total_cost / number_of_clicks.
The average cost per click is usually calculated by dividing the total cost of your clicks by your total number of clicks. However, sometimes you might see a spike in your costs, even though your numbers look good overall. If this happens, you might want to consider what caused the increase. Was it due to poor ad copy? Did someone click on your ad accidentally? Maybe your landing page wasn't optimized enough to convert leads into sales. Whatever the reason, make sure you're monitoring your cost per click closely. You don't want it to start climbing again.
If you've been paying attention to your analytics reports, you already know that your average cost per click tends to decline over time. Why does this happen? Well, in general, people tend to click fewer times on ads as they become familiar with them. So, while you might initially pay $1 for every click, as soon as your audience begins clicking on your ads less frequently, you'll end up paying less per click.
The average cost per action (CPCA) metric measures how much it costs to acquire a customer. CPCA helps businesses understand how much they are spending on acquiring customers versus converting those prospects into paying customers.
In addition to helping businesses understand the value of each channel, CPCA gives marketers insight into the overall performance of different channels. This allows them to make strategic decisions about where to allocate their marketing dollars.
Now that we've talked about some general metrics, let's dive into specific conversion metrics. Conversion rate is the percentage of visitors who convert from your website to your desired action (e.g., purchase).
A conversion is simply defined as a single action taken by a visitor to convert into a sale. A conversion doesn't necessarily mean a purchase; it could be anything from signing up for a newsletter to filling out a contact form. However, once you've defined what a conversion is, you can start counting them.
Google Analytics provides a great way to track conversions within your site. When someone visits your site, Google Analytics records the event and stores information about how many people visited your site, where they came from, and whether they converted. This data helps you understand your visitors' behaviour and decide what works best for your business.
The following are four ways to track conversions:
1. Events Tracking
2. Goal Conversion Tracking
3. Custom Variables
4. Funnels
Another important metric is the click-through rate. The click-through rate measures the percentage of people who click on your ad before leaving your website. It's similar to conversion rate, except that it doesn't measure the success of your landing page. Instead, it measures the success of your entire campaign.
This means that if you have a poor click-through rate, it doesn't necessarily mean that your landing page is bad. It just means that you need to make sure that your Google Ads are compelling.
One of the most important metrics to track is customer acquisition cost (CAC), which measures how much it costs you to acquire a new customer. CAC is also known as lifetime value or LTV.
Lifetime value is a common term used when talking about customer retention. It refers to the amount of money a company spends to acquire one customer. Once that customer becomes part of your organization, he or she will generate revenue for years to come.
Lifetime value is calculated using two variables: 1) the average lifetime value of an existing customer, and 2) the average lifetime value generated by a new customer. The first variable is easy to calculate. You simply divide the total revenue generated by all of your current customers by the number of active customers.
The second variable is more difficult to calculate because it requires knowing the average lifetime value of a new customer. To do this, you must know the average lifetime value of every person who has ever purchased something from your company.
Once you have these numbers, you can use them to determine the average lifetime value of new customers. For example, if you sell $100 worth of products per year and you currently have 10 active customers, then the average lifetime value of each customer is $10/year. If you want to find the average lifetime value of acquiring a new customer, you would multiply $10 by the number of potential customers. In this case, the average lifetime value of adding a new customer is $100 x 10 $1000.
Quality score is another metric that you'll want to track in Google Analytics. Quality score is based on several factors including:
Your AdWords account age
How many times your ad has been shown
Whether or not your ad was delivered via mobile
Whether or not your keywords match what users searched for
If you're interested in learning more about quality scores, check out this guide.
Finally, let's discuss the return on ad spend. Return on ad spend is simply the ratio between the amount of money you spent on advertising and the amount of money you made from that advertising.
If you spend $5,000 on advertising, but only make $2,500 in profit, your return on ad spend is 25%. In this case, you spent four times as much money as you made. This is not good!
To see what your return on ad spending looks like, then we can use Google Analytics.
By making sure that you are tracking the right metric, you can ensure you are on the right track to achieving a good ROI from your ads.
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