Today, we’re going to discuss the many metrics available to PPC advertisers through AdWords, and get a better idea of what each means for the overall picture.
Often times when we first meet with a new client, they will have questions about what metrics they should be looking at in their pay per click accounts. We’re often asked which piece of information is the most important to look at. Some are concerned with click through rate, others with cost per conversion, and still others with actual clicks or overall conversion rate.
While all of these metrics are important, it’s crucial not to lose sight of the big picture. When we put too much emphasis on any one indicator, it is possible to lose sight of the whole. The main thing to keep in mind is that it is all of these metrics together that paint the whole picture of your account and can give you helpful insight into its health.
Most often, when I look at the campaign view of a client account, I set it up as seen in the graphic. This view includes number of clicks and impressions, click through rate, average cost per click, cost overall, average ad position, conversions in both one per click and many per click formats, Cost per conversion in both formats, conversion rate in both formats, the value per conversion in both formats, and the total conversion value.
Almost all of these values require an advertiser to have conversion and revenue tracking enabled within an AdWords account. This is something we highly recommend all advertisers do, so that your metrics have actual dollar values associated with them. Having these values makes it much easier to make practical and well informed decisions regarding your campaigns.
Also, I’d like to briefly describe the difference between the One Per Click designation and the Many Per Click. When a user clicks on your ad, a cookie is dropped in order to associate the ad click with a conversion. These cookies are generally enabled for 30 days. When a user then purchases something from your store after clicking your ad, that conversion is accounted for in AdWords as a one per click conversion. If the user then comes back to the site a few days later, or any time within that 30 day period, and purchases again, that conversion is counted in the “many per click” column. This is helpful to see if users are returning to your site and making additional purchases, and also gives you a more accurate view of how many conversions your advertising dollars are producing.
To set up your metrics, go to the campaign view on your account. Beneath the “Campaign” tabs, there is another level of options. Select the “Columns” button, and from there, select “Customize columns”. This will give you the check boxes shown in the graphic. If you have conversion tracking enabled, you will then be able to select items from both the “Performance” and “Conversions” menus.
There are a number of options. I generally like to set up my accounts with the options shown above, but as you manage your accounts and get a better idea of what type of information is important to you, you can customize your options in a way that makes the most sense for your account.
Once you decide which options you’d like to see, just save your settings. You’re also able to manipulate the display of the columns so you can set them up in an order that makes sense to you.
Once you’ve got your conversion and revenue tracking in place, and your metrics set up, the question becomes how to look at this information in a way that will make your business more efficient.
The big picture is going to give you the information you need to make long range decisions that promote your business growth. Try not to get too caught up in any one statistic. Here are a few tips to keep in mind:
- When looking at your number of clicks or impressions, try to look at a date range of 14 days, 30 days, or more when you’re trying to identify trends. A significant drop in traffic over a period of 2 or 3 days does not generally indicate a problem unless you’ve made other changes at the same time, for example, changes to your ads or match types, or a significant change in the market for your product. If everything is the same, and your traffic decreases for a couple of days, hang in there and wait it out. It usually isn’t a trend to worry about unless the loss in traffic continues for a week or two.
- Often times, when you improve your campaigns, your overall traffic can drop. This sounds counterintuitive, but it actually makes sense. For example, if you go through your account, pause ad groups that are not converting, pause keywords that have high conversion costs, and change broad match keywords to phrase match you will be reigning in a lot of wasteful spending. When you clean up unqualified traffic, what remains is the highly qualified shoppers that you most want to click on your ads. That said, while your performance overall should improve, your number of clicks overall will decrease. This will decrease your spend and your traffic, but generally will improve your ROI. Don’t worry if your spend or traffic goes down after a campaign update. Once you’ve got your campaigns in a position where they are performing well, you can scale up based on your successes.
- Don’t fall into the trap of thinking that Click through Rate, Conversion Rate, or Cost Per Conversion is the end all, be all. Sometimes click through rate will be very low in a certain campaign, but conversion rate is high. This could mean that the traffic that you are getting is very qualified, and that your keywords and ads are targeting buyers, rather than shoppers. Likewise, if your conversion rate is low, but the total conversion value is high, a campaign may still be efficent. Finally, be very cautious when looking at cost per conversion. If you aren’t tracking the total conversion value in a campaign, this metric is almost useless. For example, if your cost per conversion is 12 dollars, but you don’t know the total amount that these conversions are bringing in, it is not a piece of data that you can act on. If, however; you’re able to track revenue and find that the 12 dollar conversion is bringing in 60 dollars in revenue, then you’re able to see that you’re making a decent profit. Conversely, if you find out that 12 dollar conversion (that may have seemed inexpensive) is only bringing an an average total conversion value of 15 dollars, you’re able to make decisions to make that campaign more efficient.
- Always look at the whole picture.