Key performance indicators are used in almost every industry. The purpose is to measure how well something is working or not. You can use key performance indicators to determine how successful your campaigns are in Google ADS.
Understanding key indicators of campaign performance is important for everyone working at ADS from the very beginning. The purpose of each ADS campaign should first be combined with different key performance indicators during the campaign planning phase.
Knowing what your campaign is trying to achieve and how to measure will help you set up Google Analytics and Google Ads just in time. You can use this to accurately measure performance from day 1 and to ensure the integrity of your campaign results.
Accurately measuring your campaign performance is the only way to show ROI to both your customers and your employer. If you’re wondering about the most important ADS key performance indicators you can use, check out the following.
Each conversion starts with a click. Therefore, clicks are an indicator of the success of the ADS campaign. This key performance indicator measures how many people click on ads.
Campaign managers check accounts throughout the month to pause non-performing ads and even increase bids for ads.
Clicks are a great key performance indicator for mid-month account performance control. However, the success of a campaign should not only be determined by clicks.
2. Clickthrough Rate
Similar to measuring how many clicks your campaign generated, clickthrough rate is a key metric for campaign performance. The clickthrough rate is measured by dividing the total number of clicks for your campaign in the month (or reported period) by the total number of impressions.
Knowing what the clickthrough rate is and how to measure it is the key to showing your performance. However, you should keep in mind that there is no excellent clickthrough rate that the campaign manager can track.
ADS performance varies by industry and other campaign variables. For example, an analysis study found that the average clickthrough rate for the automotive industry in the search engine was 2%.
Campaign managers running any campaign can use such analysis to measure the success of their clickthrough rates. However, they should be careful of other variables that are not taken into account in analysis such as budget expenditures. You should remember that this is a starting point.
Comparing and improving the clickthrough rate of different campaigns is not only important as a measure of success. It is also extremely important as it may affect other key performance indicators such as quality score.
3. Quality Score
Quality score is one of the most challenging performance indicators among ADS advertisers. This indicator is a measurement generated by Google. Your ad content shows relevance using other metrics and other performance variables, such as a landing page.
Advertisers see quality score as a difficult indicator to understand. Because they are not easier than other easily measured key performance indicators, such as clicks. The expected clickthrough rate can determine a campaign’s quality score using the landing page experience, ad relevance, and ad format.
Google is very transparent about how quality score is measured and why it is necessary. In 2017, Google improved reporting on Google Ads quality score, but it didn’t change that the quality score depends on this simple fact:
- A good quality score (between 7-10) means you’ll pay less money to advertise with Google Ads.
- A bad quality score (6 or lower) means you pay more.
Changes to Google’s quality score report have made it easier for advertisers to use quality score in Google Ads. At the same time, Google has begun to provide historical data for key key indicators. This data gives advertisers the information they need to create smarter campaigns.
Despite this complexity, advertisers are working harder than ever to improve their quality score. Because the quality score determines how much they will pay for each click. However, the quality score has the potential to affect other key performance indicators such as CPC and CPA.
4. Cost Per Click (CPC)
ADS advertisers often know how much they can pay for an ad campaign because they have a predetermined budget. However, this does not mean determining what they will pay when setting up a budget and bid during the setup of an ADS campaign.
Advertisers compete with competitors for ad positions with their bids. However, they pay the next highest bid price. Therefore, the cost of running an ad and the clicks it generates are determined by other competitors in the ADS auction.
CPC is an indicator that measures exactly how much an advertiser pays. You can measure CPC by dividing the total cost of a campaign by the number of clicks the ad has in that campaign. If you want to control the cost of your campaign yourself, you can multiply the CPC by the number of clicks a campaign receives.
5. Cost Per Acquisition (CPA)
Similar to CPC, you’ll need to determine the cost-per-acquisition when creating your ad campaigns. Google defines the average CPA as the price advertisers pay for each new customer calculated by dividing the total conversion cost by the number of conversions. Google determines your CPA based on your quality score.
However, there are some important details you need to know about CPA. Even if it’s easy to accept the average CPA, advertisers benefit from targeted CPA, a bidding technique applied during campaign creation.
Targeted CPA helps advertisers automatically set bids to achieve as many conversions as possible based on a CPA set in their advertisers budget.
However, to take advantage of the targeted CPA, you must understand the different bidding strategies, set up conversion tracking, and achieve at least 30 conversions in the last 30 days.
6. Conversion Rate (CR)
The conversion rate is not just an indication of campaign success. It is also the reason why ADS marketers are hired first.
You can measure the conversion rate by dividing the total number of clicks for the campaign by the amount of conversions obtained. The conversion rate is expressed as a percentage, which means that if a campaign has 100 clicks and 10 conversions, the conversion rate will be 10%.
While campaign managers always consider conversions, they often organize campaigns that are optimized for clicks rather than conversions.
Instead of focusing on clicks or impressions, you can now go for targeting conversions based on CPA goals. However, to be eligible to optimize conversions, your account must have received at least 15 conversions in the last 30 days.
7. Impression Share (CPM)
An impression occurs when someone sees your ad. It doesn’t matter if they make clicks. Looking at how many impressions a campaign is generating does not indicate how effective the ad you are creating is. Therefore, it is not correct to see this as an indicator of success. However, impression share adds context to your reporting story, including the total amount of impressions your ad campaign is getting.
Google generates the total impressions your campaign receives by dividing it by the appropriate total impressions. Appropriate impressions are estimated using many factors, including targeting settings, approval statuses, and quality. Impression share data is available for campaigns, ad groups, product groups, and keywords.
Impression share gives marketers an understanding of indirect competition. Knowing that you have a 50 percent impression share for one keyword indicates that your competitors have the other 50 percent.
If you increase your impression share, you’ll reduce the number of times your competitors’ ads are shown. If you want to increase impression share, you’ll need to increase your bids and budget.
8. Average Location
Google provides both paid and organic search results for almost every search query entered, and opts for balanced delivery in doing so.
Ads on Google or Bing will be ranked # 1 at the top of the search engine results page. If paid search ads are ranked # 1, organic results are ranked second.
The average position tells advertisers what rankings their ads will show most of the time. Google does not always give the highest royalty the first place. Therefore, it goes to determine the average position according to ad rank.
Ad rank is calculated by multiplying the quality score by an advertiser’s maximum cost-per-impression (CPM). However, since the average position is really an average, it is difficult to know how to calculate it. Because if your average ranking is 3, you can be on the 1st, 4th or 6th of that day.
Many businesses advertising on Google want to be ranked # 1, because the first 1-3 ads are shown even before the organic search results that everyone is working hard on. But the goal here is nothing but the arrogance of showing itself in the forefront. Because being in the first position doesn’t necessarily mean you can get results.
Some advertisers may get more conversions in 4th place for any reason. You’ll need to use average ranking to provide content around campaigns and campaign reports. However, this should not be used as a target indicator.
9. Budget Earning
Paid search marketers are almost always given a monthly budget to run their ad campaigns. Budget earning measures how close the organization or individual is to achieving the budget they set.
Most ADS marketers can provide a lot of information about how campaigns are managed. However, when it comes to measuring ADS performances, budgetary earnings are not much considered.
The reason why marketers tend to spend more or less each month on budget is the difficulty of constantly bidding and maximizing results with ongoing fluctuations in the ADS auction.
Regardless, you should know that budget gain is a key performance indicator that ADS marketers should consider.
10. Lifetime Value
Lifetime value is a broad indicator of account health and the capabilities of the ADS marketer. However, calculating the customer lifetime value for a paid call is complex. Companies that retain their customers through paid search for a longer period of time will earn much more revenue.
Even if the lifetime value is measured by the customer’s product or service life of a business, different measurements are possible. For example, if you are a service provider on a platform, lifelong value can be easily measured by looking at the days, months, or years a customer stays on the platform.
When we are a big company like Starbucks, the color changes a bit. There are many things to consider, such as average customer life, customer retention, profit margin per customer, and discounts applied.
ADS marketers typically do not perform complex lifecycle calculations, such as Starbucks. Knowing how key performance indicators are measured in other sections is certainly useful. You should keep in mind that lifelong value means different things to different marketers but is basically the same.
Google ADS Reporting
Key performance indicators are not mutually exclusive. While one indicator performance is very poor, others are unlikely to be at the best point. For example, you shouldn’t expect to have a very high clickthrough rate and low quality score because the two are related.
Improving the clickthrough rate may have a positive impact on the quality score. Increasing the quality score can positively impact cost-per-click and cost-per-acquisition by enabling more profitable ADS campaigns for customers staying longer.
With all this in mind, it is important that advertisers begin to improve their click performance and look at key performance indicators that will provide an overall picture. For example, lifelong value is an indicator that reflects the whole picture.
Even if it is possible to generate reports for each of the above metrics, key key performance indicators should be assigned to a campaign based on what is most meaningful to the customer and the customer’s goals.
You must adhere to what clearly indicates progress according to your customers’ standards. You should not overload with extra basic performance indicators just to look good.