For small businesses, the internet provides a wealth of opportunity when it comes to gaining new customers and retaining existing ones. To reach your target audience online, you are probably investing in two key areas:
SEM helps you get your website in front of customers who are already searching for your brand or services in your area. Through Search Engine Optimization (SEO), you can boost your website’s reach by ranking for critical keywords related to your brand and business.
However, for most companies, SEM alone is not enough. Paid advertising allows companies to reach highly targeted audience segments immediately.
Often referred to as pay-per-click (PPC) advertising, these ads make it possible for small businesses to secure top spots on search engine results and social media.
Paid ad campaigns can be an effective and powerful tool when wielded correctly. However, when used improperly, a PPC campaign can be a huge money drain.
Measuring metrics and adjusting your spending accordingly is key to ensuring a successful paid advertising campaign. Too often, businesses set their campaign up and forget about them, allowing precious marketing dollars to be spent without oversight. This guide will help you learn more about the metrics you should be measuring and how these metrics can dictate your paid ad campaign strategy.
1. Quality Score
You’ll receive a Quality Score when you create a paid ad campaign through Google. A Quality Score is a rating that indicates how relevant your ad is for someone searching for your keyword. This score is relative to other ads that share the same keywords.
Quality Scores are measured on a scale of 1-10. You’ll receive your ad scores at a keyword level. The higher your Quality Score, the more relevant and useful Google believes your ad to be when compared to other advertisers.
There are numerous factors that Google uses to determine your ad relevancy, including landing page quality, click-through rates, keyword relevance, and historical ad performance.
Why is your Quality Score important? For starters, your Quality Score will help you identify which ads you might need to improve. This might involve tweaking your copy, updating your landing pages, or targeting better keywords.
Most importantly, the higher your Quality Score, the less you pay for your ads to be displayed and the higher your ads will rank.
Be sure to continually check on your ads’ Quality Scores. These numbers will be updated as Google measures the number of users who click on your ad. If you see an ad with a particularly low Quality Score, it is important to dig into why that number is low and resolve the issue. Running numerous ads with low Quality Scores will quickly become a budget drain.
2. Impressions
Another important metric to pay attention to as your paid ads run is the number of impressions your ad receives. An impression is counted when someone views your ad. This does not mean they have clicked on your ad or interacted with it. It simply means that it was shown to a viewer.
Measuring impressions is important for a few reasons. First, it will help you understand whether or not your ad is receiving the number of views you expected. If you see a low number of impressions, you might need to adjust your ad’s parameters to ensure it is being shown to the right audience.
Secondly, if you notice a high number of impressions but see low clicks, you might need to adjust either the audience you are showing the ad to or the ad itself. While impressions can help with brand awareness, you could be wasting a large amount of money if people aren’t interacting with your ad. This leads to our next metric, click-through rates.
3. Click-Through Rate
A click-through rate (CTR) is measured by counting the number of times an ad is clicked on for every 100 impressions. For example, if your ad has 200 impressions — e.g., 200 people have seen your ad — and 20 people clicked on the ad, you’ll have a CTR of 10%.
Measuring your CTR is extremely important. If your ad is displayed to hundreds of people, but you have a low CTR, you probably aren’t accomplishing much. Additionally, your CTR contributes to the Quality Score we talked about above. Therefore, a low CTR will hurt your ad rankings and cost you money.
If you notice your ad has a low CTR, there are a few things you can do. First, try A/B testing your copy, images, and call-to-action. Tweaking a few items might help your ad become more appealing, leading to an improved CTR. Secondly, consider adjusting your audience. You might be displaying an ad to a segment of people who are not a good match for the advertisement.
4. Conversion Rate
Let’s say you have an ad with a high number of impressions and a strong CTR. You might think that it is time to celebrate. However, before you get too excited, make sure you are also taking the time to track your ad’s conversion rate.
A conversion rate is calculated by counting the number of times an ad results in a conversion and dividing that by the number of tracked ad interactions. For example, if you have an ad that received 1,000 clicks and resulted in 30 conversions, your conversion rate would be 3%.
Your conversion rate is incredibly important to measure. While receiving a high CTR is a good thing, if those click-throughs don’t result in a conversion, they might not be contributing to your goals.
Keep in mind that what constitutes a conversion will depend on the goals you set for your ad. A conversion could be a sale, a scheduled service, or a newsletter sign-up. It is entirely up to you, but the idea is to track a tangible result from your ads.
5. Cost Per Click
Your ad has a high Quality Score. It is earning a large number of impressions and, better yet, a high CTR. However, don’t stop there. You might be turning impressions into clicks, but the question is, at what cost?
One way to measure the cost of your ads is to look at your cost per click (CPC). The CPC is determined by looking at a specific period and measuring the total cost of all clicks divided by the number of clicks your ad received. This will showcase how much you are spending on each click-through.
CPC is an important metric for understanding the value of your paid ad campaign. If your CPC is extremely high, those clicks might not be generating enough revenue to make the ad campaign valuable.
If you notice that specific ads have a high CPC, it might be worth pausing those or lowering your spend.
6. Cost Per Acquisition
Related to CPC is cost per acquisition (CPA). An ad’s CPA calculates the total amount you spend on an ad and divides that by the number of conversions you receive. This provides you with the estimated cost for each conversion.
While CPC will provide a quick insight into how much a click costs you, CPA takes this a step further. CPA is a method for directly connecting the costs of an ad campaign to the revenue it is driving.
Remember, conversions are calculated based on the goals you set. If you set your conversion goal as a scheduled service, your CPA will reflect the amount you are spending to achieve that goal. This can be incredibly powerful when your conversion goal is tied to your business’ revenue. This number will help you determine whether or not your ad spend is resulting in business growth. It can also help you decide which ads to pause and which ones to put more money into based on your goals.
7. Impression Share
Another interesting metric to measure is impression share. This number will help you learn more about how your business is doing compared to your competition.
An impression share is calculated by taking the total number of impressions your ads receive and dividing it by the total number of impressions your ad could possibly have received.
Measuring your impression share can be valuable for a few reasons. First, it will let you know how much of a specific ad space you currently own. If you only have a tiny fraction of impression share, there might be a wealth of opportunity for you to tap into. By increasing your budget, you might be able to widen your reach significantly.
Secondly, impression share will give you a good idea of where your competition might be outpacing you. If you notice that your impression share is suddenly dropping for a specific ad set, it might be because your competition is now bidding on the same keywords. In this case, you might need to transfer your budget from one campaign to another to prevent your business from losing out on critical customers.
Customize Your Metrics Based on Your Goals
Measuring metrics is critical for running a successful paid ad campaign. If you don’t pay attention to the performance of your ad campaigns, you can waste money on underperforming ads and neglect spending on ads that are winning you leads.
Keep in mind that you should customize the metrics you measure to match your specific business goals. What metrics indicate that your ad campaign is a success will depend on your intentions.
For example, a high CTR might actually be a sign of success if your goal was to increase traffic to your website. However, if your goal was to increase sign-ups for your newsletter, a high CTR alone isn’t an indication of success. Always keep your goals at the forefront as you measure metrics.
Optimize your Paid Ad Campaigns Today
At J&L Marketing, we are passionate about helping our clients build intelligent paid ad campaigns. We will help you measure your campaign constantly, adjusting keywords, improving landing pages, and targeting the right demographics along the way. We help our clients ensure that their ads reach the right audience at the perfect moment. Don’t waste money on underperforming ads. Optimize your paid ad campaigns today with the help of our team. Reach out for a consultation and learn more about how we can help.
