Knowing how your pay per click campaigns are performing will help your business achieve consistent high performance. Wondering just how you will know what’s working and what’s not? Let’s jump in and discover the key performance triggers and how we can analyse them to understand your performance.
To break down how your AdWords campaigns have been performing, we need to start with separating the relevant data. Because we love to make everything easy breezy – these metrics can be understood easily if we break them down into the three below categories:
Traffic based metrics
Traffic based metrics are the simplest form of measurement for tracking the performance of an AdWords campaign. To find these results, head to your campaign dashboard. There are lots of metrics that can be measured from a keyword, ad group, advert and campaign level. Each of these metrics will indicate to you the performance of your account. How so? Check out the click-through rate, quality score, clicks, impressions and average cost per click.
Within these the metrics that will give you the most realistic idea of how your campaigns are performing will be:
Click-through rate (also known as CTR)
The Click-through rate is one of the simplest metrics for you to measure and also a metric that most businesses focus a lot of their attention on. The notion is that the greater your click-through rate, the more relevant and relatable your keywords are to users searching. Click-Through rate is also one of the factors that determine the quality score of your advertisements and finally the cost you will pay for your clicks.
So, what’s a quality score?
Google uses a process to establish just how relevant an advert, keyword and landing page are to a user’s search request – this is called a quality score. If your keywords for example, are extremely relevant to multiple user searches, resulting in a positive experience, then your quality score will be high. Factors that considered when calculating a quality score include:
Acing all of the above? Great! The higher your CTR and quality score the lower your cost per click will be.
And so, this brings us to Clicks!
Only one of the easiest metrics to determine how much traffic your keywords in campaigns are creating. With clicks, you will be able to see what keywords are performing best. In addition to this, you can also view how many users are clicking through to your website.
It’s all sounding pretty great, huh? Well not to burst your bubble, these metrics are useful for an overall indication of your campaigns performance BUT they aren’t the be all and end all of measuring performance for your actual business goals.
Why? They simply just don’t provide enough information. Sure, the above is showing us who is clicking and how many people but we want to go deeper. We want to know what campaigns are actually driving this traffic to make a sale, ask a query of the business or take action like a phone call.
Ok, so how can we get this information that would help more?
Hello our second metric pillar… Conversions!
Tracking conversions will allow you to gain an understanding if your AdWords traffic is doing all of the above – generating sales, driving enquiries or inviting customers to call and interact with your business. Good news, there is a simple way to do this. Google have integrated conversion tracking which is stress-free to get set up on your business websites. If you haven’t already integrated conversion tracking, then we recommend jumping on this setup as quickly as possible to allow you to start calculating the metrics that matter.
Once you are measuring your conversion data, you will be able to tell how many enquiry forms, phone calls and sales were made from your campaigns and what’s better? You will also be able to find out what your cost per conversion was for each of these – now we’re talking!
By measuring your conversion rates, you are ensuring that the traffic your business is paying for is the highest performing and taking the desired action on your campaigns. A high conversion rate is what we’re aiming for – always.
Just as importantly – your business cost per conversion will tell you how much each conversion is costing your business. Often businesses will think a campaign that is sending through lots of leads with a low cost per conversion means it is your best performing campaign. This isn’t always the reality – we need to take a further step and analyse how many conversions became paying customers. This is when it’s important to measure the performance against your actual business goals.
To do this you will need to focus on our third metrics of our pillars – Return on investment (also known as ROI)
If you are tracking your return on investment, you will be able to focus on what sales are a direct result of your ad groups, campaigns and keywords. So, what’s the best way to calculate your ROI?
Put simply, your return on investment is the ratio of new profit based on the cost it took to achieve that profit. When using Google AdWords, what every business needs to know is the advertising return on investment and we have a simple formula which you are able to follow in order to work this out:
AdWords Return on Investment = (Total Profit – Advertising Costs / Advertising costs x 100
To put this into an example; imagine you have a pottery business and the total revenue generated from your Google Ads was $4500 last month, your cost of making these pots and paying your staff were $2500 and your advertising spend was $500. You could then use our formula provided above to determine your ROI as:
Total Profit = $4500 – $2500 = $2000
So, for the calculation, the results will be:
($2000 – $500) / 500 x100 = 300% Return on Investment
Try giving it a go yourself using your own business figures – promise it’s the only math we will make you do!
In addition to tracking your Return on Investment, many small to medium businesses value a call or customer interaction to be of high value in converting sales. If this is your business, Google AdWords has a built in feature where businesses are able to track the calls to telephone numbers that are listed on your website. Google are able to do this by using a Google forwarding number. When you can track which calls led to more business, and which keyword or particular advertisement prompted a user to call, then you can start understand what is working for your business.
For most ecommerce websites, the conversion value for shopping cart transactions in your store is imperative to capture. If you are capturing this data, you can then set a conversion value for your products and get your Return on Investment data straight from Google AdWords. This is most commonly referred to as Dynamic revenue tracking and there are a couple of ways to integrate conversion tracking with ecommerce stores. To do this, it does include a little modifying to your ecommerce store code on your website to send the conversion value to AdWords.
In addition to this and depending on how you log your enquiries, whether it be a CRM system or relying on spreadsheets, if you are able to track which enquiries led to converting a user to a customer and then the value of that customer then you will also be able to track which of your campaigns are the most profitable. Customer lead tracking will also make it clear for your business which campaign is delivering a positive ROI for your business.
The metrics that we have covered are important in their own way to help you determine the performance of your Google AdWords campaigns. It’s evident that if your campaigns are not delivering a positive Return on Investment, then it is time to make some changes to make them more profitable for your business.