Have you ever wondered how you can track valuable data points and measure how your campaigns are performing? It would help if you kept several metrics in mind on a daily basis to understand where you must tweak your marketing strategies to give them the limelight they deserve to achieve the goal you intend on.
This blog highlights the top ten metrics that matter in Pay-Per-Click (PPC) advertising.
Top 10 Metrics That Matter in PPC Advertising
1. Click-Through Rate (CTR)
Click-through rate (CTR) is a metric that represents the percentage of users that have clicked on your advertisement out of the total number of users that actually viewed it. CTR provides you with a more complete view of engagement than simply the number of raw clicks an advertisement receives. It also provides more context and acts as a guide for relevance and effectiveness.
Visibility of advertisement is only completing half the race. CTR gives a perspective of how many times the advertisement was clicked on compared with the number of opportunities you gained for clicks. A smaller CTR can mean that your advertisement is not getting the visibility or attention it is supposed to.
CTR can be calculated as:
CTR = (Number of Clicks / Total Impressions) x 100
2. Cost Per Click (CPC)
Cost-per-click (CPC) is a charge paid when someone clicks on your advertisement. The maximum bid is paid when you are willing to pay for every click. Thus, the greater the bid, the better the chance of your advertisement being visible for a specific keyword. When you upgrade your CPC, your budget goes downhill from there. Hence, keeping an eye out for this metric is crucial.
CPC can be calculated as:
CPC = (Total cost of clicks / Total number of clicks)
3. Conversion Rate (CVR)
The real magic only happens when a user clicks on your advertisement. The Conversion Rate (CVR) is an extremely similar metric to why you must measure conversions but with a little more detail. It represents the number of opportunities you are missing and nudging you to keep tweaking until you are enhancing your conversions.
The CVR also enables you to understand the intent and readiness of users to make purchases from you. Thus, in case one of your campaigns has a greater CVR than the others, the intent of the users from this campaign is greater.
The CVR can be calculated as:
CVR = (Number of conversions / Total Clicks) x 100
4. Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) is a crucial metric used to measure the cost of acquiring new customers through their efforts in advertising. This business metric tracks the effectiveness of the marketing campaign while optimizing their spending for better ROI. CPA is essentially like a financial detective.
CPA is calculated as:
CPA = (Total cost of advertising / Number of conversions)
5. Return on Ad Spend (ROAS)
Return On Ad Spend (ROAS) is a metric that effectively measures the effectiveness of your advertisement campaigns that specifically generate revenue when compared to the amount invested. ROAS is crucial for two important reasons:
- Enables data-driven decision-making
- The higher the ROAS, the greater the success
ROAS can be calculated as:
ROAS = (Revenue from advertisements / Cost of advertisements) x 100
6. Impression Share
Impression share is a metric that keeps track of the number of impressions your advertisement has generated when compared to the estimated amount it must receive. Impression share also depicts the effectiveness of your advertisement and hence this tracking metric highlights where you are missing opportunities to enhance your reach to its full potential.
Impression share can be calculated as:
Impression Share = (Number of impressions received / Number of impressions eligible to receive)
7. Quality Score
Quality score is a metric that is employed in paid searches only. It determines the relevancy of your advertisement when compared to the others and its likelihood of being clicked upon. This metric also determines the experience quality that your landing page provides.
Quality Score has its relevance today but it is only really visible for relevant keywords. When it is to other types of Pay-Per-Click advertisements, good alternative metrics are used for tracking. Landing page experience and advertisement relevance are some examples. Most advertisement platforms prefer advertisements they know that their users will love and hence a high quality score is necessary for a lower cost-per-click.
Quality score can only be estimated through advanced search engine algorithms and it is based on the keyword relevance. The historical performance also adds to the quality score.
8. Ad Position
Ad Position is a metric that determines where your advertisement appears on the search engine results. It is impacted by a few parameters like the quality of the advertisement and the amount you bid for that specific keyword. Ad position provides you with a reality check. It will tell you your ad position and if your ad is relevant. It also showcases the relevancy of your advertisements and whether you are bidding the right amount for that specific keyword. This parameter can be used to assess whether you need to make those adjustments to stay in the race.
9. Cost Per Lead (CPL)
The amount you invest to capture every possible lead for your business is known as Cost Per Lead (CPL). It determines how much you are spending to turn website viewers into revenue-generating leads. Through the measurement of CPL, you will be able to evaluate the effectiveness of your advertisement campaigns while ensuring you are investing wisely to gain valuable customers.
10. Customer Acquisition Cost (CAC)
Customer Acquisition Costs (CAC) is a metric that determines the amount of money a business must invest in acquiring a new customer. To minimize the CAC metric, you must refine the target audience, enhance conversion rates, and enhance advertisement quality. Ensuring that you are keeping the CAC parameter low is essential for maximizing gains.
CAC can be calculated as:
Customer Acquisition Cost (CAC) = (Total campaign cost / Number of customers gained)
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