Updated 09 May 22
Google Ads (formerly known as AdWords) is an advertising platform run by Google. Google ads operate on a pay-per-click model, meaning advertisers pay Google when users click on their ads. No doubt you’ve seen these ads at the top and bottom of your Google search results.
You can just set up ads and leave them. Well, you can... but only if you want to throw away money! Google ads need to be monitored, evaluated, and optimised. They need to be analysed regularly.
It is critical to focus on a handful of key metrics that give you meaningful insight into what’s really working and what isn’t. This way you can optimise and manage your Google Ads properly.
So the million dollar question. Out of the hundreds of marketing metrics to look at, which ones are most important? Which should you be looking at to educate your optimisation decisions?
The CTR of your campaign is an indicator of how relevant your ads and keywords are to your target audience. CTR gives you an overview of your account’s performance - since this metric reflects how many people are clicking on your ads!
Here is how Click Through Rate (CTR) is Calculated In Google Ads;
CTR = Number of Clicks ÷ Number of Impressions.
In most cases, the Click Through Rate of ads and keywords can have the most significant impact on Google AdWords campaigns. This is because CTR indicates how relevant and compelling ads are to the target audience. You can look at CTR as a way to find ads and keywords that need to be improved from the perspective of your customers.
If your keywords and ads have a high CTR, then you can often expect your campaigns to have a good Quality Score (QS). While this is not always the case, you can look to CTR as a metric to further investigate if you see high Cost Per Click (CPC) or low engagement with your campaigns.
You can test new ad copy, optimise keywords, and apply geotargeting to your accounts which can boost CTR and the overall health of your campaigns!
Quality Score (QS) is Google’s way of measuring the relevance of keywords. Google’s main objective is to provide the most relevant and valuable information to online searchers, and you can use QS as a way to measure how much Google trusts your ads compared to your competitors.
Here Is how Quality Score is calculated in Google Ads;
Quality Score = Keyword relevance, and relevance, and URL relevance + User experience
QS is a way to make sure that your ads are providing a positive experience to searches, and that your campaigns are relevant to search queries. Some of the advantages of a higher Quality Score include:
- More Clicks.
- Lower cost per clicks.
- Higher ad placement on search engine results pages.
- Higher conversion rates.
Google uses QS to determine how often your ads show, where they show, and how much you pay for each click. Google’s algorithm uses several inputs to decide on QS, including:
- The click through rate (CTR) of keywords and their corresponding ads.
- The relevance of keywords to their ad groups.
- The importance of keywords and ads to search queries.
- The quality of the landing page associated with each ad group.
As you can see, QS is a valuable metric that you should frequently refer to when optimising your accounts. You should always keep your QS above a 5 (4 as the absolute minimum!) unless your Google Ads strategy involves keywords and ad groups that target competitor terms.
The amount of money you spend each time someone converts through PPC marketing can be tracked with the Cost Per Action (CPA) metric. Unlike other metrics, this reporting metric takes into consideration the actions of your customers throughout the entire process and can give you insight into opportunities to improve User Experience on your landing pages.
Here Is How Cost Per Action is Calculated In Google Ads;
Cost Per Action = Total Ad Spend ÷ Total Conversions
You should not overlook Cost Per Action because this number tells you exactly how much money you are spending on each Conversion. If you are spending lots of money to acquire new leads but not hitting a set margin based on your products or services, then your Cost Per Action will be high. It’s a calculation of the cost you incur to achieve your desired outcome, such as acquiring a new registration or a new customer.
CPA is crucial to the success of your marketing campaign, and you should always refer back to this metric as you look to optimise your Google Ads management strategies. A lower CPA means that your campaign is more profitable. Cost per Action is affected by various parts of the conversion funnel such as the price per click and the conversion rate of your landing page.
If you’re paying more to acquire a new client than that client is actually worth to your venture, then your Google ads campaign is failing because you’re not attaining the desired ROI (return on investment).
Cost per click is how much you pay per click (pretty self-explanatory). This is an interesting metric though, because many think there’s not much one could do to change this. However, well-optimised campaigns should lead to a declining CPC over time. Over the course of a year, you should aim to see your CPC drop by 10% or so.
Here is how Average Cost Per Click is calculated in Google Ads;
Avg CPC = Total Cost ÷ Total Clicks
“Average CPC” in Google Ads is the average that you’ve been charged for clicks on your ad campaign.
Search Impression Share shows you the potential number of impressions that your campaigns are eligible to receive. Also, this metric shows you the estimated demand for a specific product in Google and how you stack up to your competition’s PPC marketing efforts.
Here Is How Impression Share is Calculated In Google Ads;
Search Impression Share = Number of impressions received ÷ Maximum a potential Number of ideas you’re eligible to win.
If you are suffering from low Search Impression Share, then you can assume that your account is under-optimised and missing opportunities. You can look at Search Impression Share as a way to understand the broader market, and this is a valuable way to see how your broader PPC marketing strategy is working along with other available metrics.
Therefore, if there are 200 opportunities that an ad could show (based on the specified criteria) and it shows 150 times, the search Impression share is 80%. Therefore, you want your ads to be displayed for every available opportunity and push the Search Impression Share as close to 100% as possible.
It is essential for your ad campaign to perform well at all levels in order to achieve your objectives e.g. selling more products online or getting high-quality leads. This is where Google ads campaign metrics come into play.
You can only get close to your goals with ads by identifying key Google Ads campaign metrics and monitoring them regularly to tweak your ads accordingly.
Conversion Rate (CR) refers to the number of people who clicked your ads and proceeded to complete the desired goal on your landing page. This is often achieved when a customer makes a purchase, but you might define a goal differently e.g. email signups or filling out a form.
Here Is How Conversion Rate is Calculated In Google Ads;
Conversion Rate = Number of conversions ÷ Number of visitors
The ultimate goal of a Google Ads campaign is to drive more conversions. It is the job of keywords to get your ads shown, the role of ads to get people to click and go to your landing pages, and it is the job of your landing pages to get your customers to convert. A healthy Conversion Rate means that the money you’re spending is actually generating profits. Most industries consider a conversion rate of 1-3% success, but this measurement of success will depend on your specific industry and customer base.
You want to consider your account’s Conversion Rate because not only does it show how well your keywords, ads, and landing pages are performing, but a high Conversion Rate also reduces your Cost Per Click. This means that by driving qualified customers to optimise landing pages, your business can enjoy more sales while also spending less on each click.
You can improve your Conversion Rate by learning how to optimise your landing pages with keywords. Your target audience should know they are accessing a relevant page for their query.
I hope that has given you a greater insight on what 6 metrics you should be monitoring when running google ads. My parting words of wisdom to you is TEST. Be sure to test your CTR, CPA, CPC, Impression Share, CR, and QS to lessen wasted spend and get more conversions!