You’ve set up a Google Ads search campaign for one of your businesses and it’s been running for a week or two, but how are you tracking your performance? Here’s a paid search guide to understanding all of the metrics you need to know for a successful paid search ad campaign.

Key Performance Indicators For Your Paid Search Campaign

KPIs (Key Performance Indicators) are the specific metrics that businesses use to determine how well things are going. Not all metrics are going to be relevant to what you’re doing, so picking the right metrics is super important. You can spend hours going through different KPIs and still come up short handed.

So which metrics are the best for measuring success in your paid search campaign?

Well, let’s go through a few important ones.

Click-Through Rate (CTR)

CTR is an extremely useful metric to keep watching when you review the performance of your campaigns. Essentially, CTR is the number of times people clicked on your ad divided by the number of people who saw your ad on the SERPs (Search Engine Results Pages).

This metric gives you the percentage of people who clicked on your ad out of everyone who saw it. So how can you make use of this number when optimizing your campaign? Here’s how.

When people click on your ad, it’s for one of two reasons. They were interested in the text you provided in your ad, or your ad was extremely relevant to that specific search query. So if you have a high click-through rate, it means your ad copy is highly relevant and interesting enough to be clicked on.

Now you must be wondering whether or not your CTR is too low or too high. Not to worry, every industry has their own CTR, so you can see how you stack up against the competition. If you’re interested in your industry’s click-through rate, here’s the average CTRs of 16 different industries.

Industry Average CTR (Search) Average CTR (GDN)
 Advocacy  4.41% 0.59% 
 Auto  4.00% 0.60% 
 B2B  2.41% 0.46% 
 Consumer Services  2.41% 0.51% 
 Dating & Personals  6.05% 0.72% 
 E-Commerce  2.69% 0.51% 
 Education  3.78% 0.53% 
 Employment Services  2.42%  0.59% 
 Finance & Insurance  2.91% 0.52% 
 Health & Medical  3.27% 0.59% 
 Home Goods  2.44% 0.49% 
 Industrial Services  2.61% 0.50% 
 Legal  2.93% 0.59% 
 Real Estate  3.71% 1.08% 
 Technology  2.09% 0.39% 
 Travel & Hospitality  4.68% 0.47% 

If the CTR of your campaign matches or exceeds the CTR of your industry, you’re doing pretty well. If your CTR is marginally lower than the industry standard, you will want to consider updating your copy and trying out new verbiage to generate more clicks.

Conversion Rate

So, you have a strong click-through-rate on your ads. Does it stop there?

Nope!

You need the traffic you generate from clicks to actually convert into leads or any desired action you wish your audience to take. There’s really no point in garnering clicks to your website unless they take some form of action.

Conversion rate is comprised of two things: clicks and conversions. This metric calculated by taking the number of people who took an action on your website, whether that be buying your product, subscribing to your newsletter, calling your business's number, etc.. and dividing it by the number of people who clicked on your ad.

This is one of the most important metrics when defining how successful your ad campaign is. If your conversion rates are too low, this could mean a few things.

One, the user clicked on your ad and decided that your website is not presenting what they’re looking for.

Secondly, the user had a poor user experience. The page was hard to navigate or not clear on it’s messaging. That’s on you.

Lastly, as a second aspect of the user experience - your page took forever to load. Page speed is a huge factor when it comes to affecting conversion rates.

Your conversion rate won’t directly tell you if your landing page is optimized, but it can give you a good idea. If you’re interested in figuring out if your landing page is optimized for conversions, here’s a few pointers that can lead you in the right direction:

  • Make sure your page speed is fast. You’re lucky that the user even clicked on your ad, if you expect them to stick around for long loading times, you’ve got another thing coming.
  • Make sure the offer you presented in the ad copy is on the landing page. Don’t give false promises on your search ad.
  • Keep it simple. Sometimes the most compelling of landing pages are the simplest. An overly complex page will confuse your potential customer, and will likely pressure them to bounce from your page.
  • Make your headline clear and concise. If there’s one thing you could tell your customer to get them to buy, this is where you say it. Your headline doesn’t have to get them to convert immediately, but it should get them interested.
  • Generate desire in your product by laying out some of the most prominent benefits of what you’re selling.
  • Make your CTA (Call To Action) shine bright. Make sure the color of the button goes well with the rest of your website. Colors are great evokers of emotion. Also create a sense of urgency. Tell your customer exactly why clicking that button is good for them.

Cost Per Click

We know it’s easy to forget, but paid search costs money. Depending on the competition of your specific keyword, you could be paying a lot, or a little.

Every time someone clicks on your ad, you pay money to Google, or whatever search engine you’re advertising on. This is where it gets tricky, because your CPC depends mostly on what you’re willing to pay, along with a few other factors.

Take a really good look at the keywords you’re paying for. If these keywords aren’t highly relevant to the services you offer, don’t bother bidding on them. If you’re looking for cheaper keywords, try long-tail keywords. They’re often cheaper and have less competition than head terms.

Once you’ve figured out which keywords you want to purchase, it’s time to enter the bidding sphere.

It’s likely that the keywords you’ve selected are ones that your competitors selected too. So who gets the ad spot? The one who pays more. Google allows you to set a max CPC (the maximum amount of money you’re willing to pay) and you’ll never pay more than that. If your bid wins, you get the ad spot.

Generally, the more money you put down on a bid, the higher your ad will be positioned. There are up to four ad spots on the SERPs, so depending on where you want to be placed, you can manually adjust your bid.

If you’re looking for a more hands-off approach, you can let Google make automatic bids for you. Google will attempt to set your bids for you with the goal of getting the most clicks within your ad budget.

But be careful, just because you’re letting Google do the work doesn’t mean you can set it up and forget about it. Constantly monitor your ads performance to make sure your ad is performing how you intend.

Aside from bidding, there are other factors that play into how much you pay for an ad spot. Quality Score is one of them. This metric is used to determine how relevant your ad, landing pages, and keywords are. We’ll get into how quality score affects you ad cost and placement in just a second.

Cost Per Conversion

We talked earlier about conversion rates and how to calculate how many people are taking action on your website versus your overall clicks. While that metric is essential, even more important is your cost per conversion.

Cost per conversion measures how much it costs you to acquire a customer. To calculate this, take the total dollar value of the traffic you generated in your campaign and divide it by the total number of conversions you’ve attained. For example, consider your ad campaign has cost you $300 so far, and you’ve converted 15 times. Cost per conversion=$300/15 conversions. Your cost per conversion is $20.

It’s essential that you compare your cost per conversion the overall value of each conversion.If you’re in an industry where the value of a conversion is less than $20, you’re losing money.

But if the value of a conversion in your industry is greater than $20 and you can generate a lifetime customer from each conversion, than your ad campaign is on track for success.

Your cost per conversion is never set in stone and it changes from campaign to campaign. There are a number of ways to reduce your cost per conversion by optimizing your overall campaign, here’s a few examples.

  • Pause keywords that aren’t converting. Timing is everything here. If a keyword hasn’t been converting for an excessive amount of time, consider pausing that keyword. Be careful, if you pause too early, you may risk losing conversions because that keyword could perform better in the future.
  • Assess your negative keywords. Find keywords that are irrelevant to your advertising objectives and block them from your campaign. If you don’t you’ll end up spending money on keywords that don’t help you convert.
  • Analyze your conversions by the day of week or even the time of day. Figure out which days/hours you convert the most. By doing this, you’ll know the specific times you should bid more and the times to avoid bidding.
  • Make sure your landing pages are fully optimized for user experience. Create crystal clear conversion paths that make it easy for users to navigate.

Quality Score

One of the most important metrics in your paid search campaign is your quality score. Google is all about improving user experience, and this is a metric that helps achieve that goal. Google wants advertisements to be relevant and of high quality for users who click on them.

This is a defining score for your overall performance. Google assigns you a quality score based on the relevancy of your keywords, the quality of your ad, and how optimized your landing page is for user experience. After assessing each aspect of your ad, Google will assign you a score from 1-10, 10 being the best.

The higher your quality score, the better ad positions you’ll get, and the cheaper it will be to run your ads. This is why quality score is the most defining metric of them all. Work on improving your quality score and your time and money spent on paid search will be well worth it.

Here’s the three best ways to improve your quality score:

  • Split your ad groups into more targeted campaigns. This will help get your ad to users who will find your ad to be much more relevant. Each ad group needs its own set of relevant keywords. Be sure to research your keywords. If you’re using keywords that aren’t relevant to the product or service you provide, Google will pick up on this and lower your quality score.
  • Write a higher quality ad copy. Keep the copy of your ads simple but effective. This involves focusing more on the benefits of your product or service. Tell your potential customer why buying into your brand will improve their quality of life.
  • Make sure the keywords in your ad copy mimic those on your landing page. If your ad is already relevant to the webpage it links to, you shouldn’t have any problems here.

Leave No Paid Search Metrics Behind

Every single KPI listed here is critical in understanding how well your ad is doing in the search network. Learning how to improve these metrics is just as important as understanding them.

When you get down to it, all of these KPIs are interconnected in some way. They can all be improved simultaneously if you work on the right things. Let’s do a quick recap of some of the optimizations you can make to your campaigns.

To achieve a better click through rate:

  • Improve your ad copy.
  • Make your ad copy highly relevant to the keywords you’re bidding for.

To improve your conversion rate:

  • Improve your page speeds.
  • Create a simple landing page with clear conversion pathways.
  • Keep your ad copy congruent with the content of your landing page.
  • Make your CTA button shine, get creative with it.

To optimize your cost per click:

  • Figure out what you’re willing to pay for a keyword.
  • Choose keywords relevant to your brand’s products and services.
  • If you want to spend less, use long-tail keywords that have less competition.
  • Constantly keep an eye on your ad performance, especially if you’re letting Google do the bidding for you. (Automated bidding)
  • Improve your quality score.

To minimize your cost per conversion:

  • Pause the keywords that aren’t converting after too long of a period.
  • Block irrelevant keywords by making them negative keywords.
  • Look at the time of day or day of the week you’re converting, and bid higher then.

To raise your quality score:

  • Optimize your landing pages for a better user experience.
  • Make sure your ad is relevant to the user who clicked on it.
  • Improve your click-through rate with simple but relevant ad copy.

The Takeaway

Now you might be starting to see how these all intertwine. While all of these metrics are different, they work together to give you a really good idea of the overall success and effectiveness of your paid search campaign.

Sometimes optimizing your ad campaign is just a simple update in your ad copy to make it more relevant, or it could be an entire landing page rework to make your user experience better. Use these KPIs to figure out exactly what you need to optimize.

This guide is meant for paid search only. If you’re interested in how paid search stacks up against organic search, be sure to check out our blog on Paid Search and SEO: What You Need to Know.

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Paid Search