5 Most Important KPIs for PPC Campaigns
5 Most Important KPIs for PPC Campaigns
In the mix of ROAS, CPC, CTR, PPC, and SEM, you can quickly lose sight of the essentials. So many abbreviations, so many different metrics with which we in performance marketing can measure the quality of an advertising campaign! But which KPIs (Key Performance Indicators) are really important for you and your ads on Google Ads? Which values look great, but don’t bring you anything? We have identified the 5 most important KPIs for PPC campaigns and present them to you today on the blog. As a small bonus, there are also 5 values that you don’t care about.
With PPC advertising, SMM and SEM, it always depends on the customer’s goals. Not every metric is relevant to every campaign. Our experience shows that not all advertisers focus on the most important key figures, but rather on subordinate KPIs. To understand the interplay and interaction of key figures, you need experience. As a?Digital Marketing Company in Bangalore?with expertise in PPC and with a focus on conversion, we particularly care about KPIs that have a concrete, verifiable influence on your sales.
How do I find out which KPIs are relevant for me?
At first glance, it is very clear: you want to make more profit. So your profit or sales will be the crucial KPI for you. That is absolutely correct, especially if you look at the topic of?digital advertising?globally.
The question, however, is: how do you get there so that you can make more profit?
There are different approaches, in the first step you naturally focus on the most valuable users. These moves are usually in the so-called bottom-funnel. They know what they want and are about to buy. To evaluate the success of the campaigns targeting this type of user, you should look at really hard metrics like ROAS, CPA, or sales.
Users who are in the so-called mid-funnel are still in the decision-making phase. The above-mentioned KPIs naturally also play a role here. But if you look exclusively at your sales, for example, then you will make wrong decisions. For these campaigns, you should use other KPIs for evaluation. An overview of various soft factors is suitable: CTR, bounce rate, or session duration. However, you should not overinterpret these and only evaluate them in conjunction with the number of conversions, ROAS, etc.
The top funnel is about attracting attention. The users have a problem but don’t yet know the solution. So the goal is not the deal itself, but the preparation of the purchase. If you look at the same KPIs in these campaigns as in the bottom-funnel campaigns, then you will usually conclude that these are not valuable to you.
A fallacy: this may be true in the short term, but if you want to grow, these types of campaigns are essential for your company’s success.
The main thing here is to evaluate the quality of the traffic. This means that the soft KPIs from the mid-funnel have an even greater impact on measuring the success of your campaigns. Whereby we say again: Only the combination of several KPIs is really meaningful.
Pro tip: Better to use KPIs that describe a ratio (CPC, ROAS, CTR) than absolute values (conversion, clicks, impressions) for the successful evaluation.
The 5 most important KPIs for PPC campaigns
As for performance marketers, we are naturally interested in making profits for and with our partners. Therefore, we would like to stick within our opinion – the five most important KPIs of the bottom funnel.
This is where the decision is made as to whether the advertising measures will pay off and, to put it bluntly, whether or not money will be made.
We want to protect you from wrong decisions based on inappropriate KPIs and show you what to look out for in your most important advertising campaigns.
ROAS / ROI – Return on Ad Spend and Return on Invest
ROI and ROAS answer a very simple question: Did you make more money from advertising than you spent?
The ROI (Return on Investment) considers all aspects that flow into your advertising budget: click costs, CRO costs, hourly rate for external experts, support, and other cost centers in online marketing. The ROAS (Return on Ad Spend), on the other hand, tells you how sales and costs for the ad compare.
No matter what you offer and how you align your campaign: this value should always be positive. That’s the whole point of online advertising – that you end up making more money than you spend on advertising. This should be at the top of your to-do list. If you lose sight of the fact that your PPC campaign is supposed to make you money, the budget can melt faster than you would like.
How to increase the ROAS in your PPC advertising campaigns
There are many ways to increase ROAS:
The ROAS and ROI are particularly important because they provide you with an important reality check: Are your costs appropriate for the respective success? Because a fantastic ROI also means good sales figures compared to the budget spent. Whether the ROAS or the ROI should be your core KPI depends on the campaign. If your goal isn’t necessarily to generate more sales, but want to achieve branding impact, an ROI of 0.01 will do the same. In addition, the KPIs in PPC marketing should never stand alone, but should always be viewed in context.
CPA – cost per acquisition and cost per conversion
The ROI deals with the profit you will get from your campaign in the end. With a CPA, you take a closer look at the costs you put into advertising. Cost per Acquisition (CPA) is the umbrella term for purchases, conversions, and leads and can roughly be translated as “cost per acquisition”.
A particularly high or particularly low CPA is not a criterion for the quality of a campaign. In?eCommerce?with small profit margins, a low CPA is appropriate, while the costs per conversion in the B2B area can also be three-digit. It is less a matter of the absolute costs than of the relationship between profit and stake.
Just like the ROI, the CPA is an important aspect to track, analyze and optimize the performance of your PPC campaign over a certain period of time. To know which metrics are good for you and your campaign, you need to establish a clear strategy beforehand that is based on your business figures.
3 ways to lower your CPA
Remove what is not going well! In every PPC campaign, there are ad groups that perform poorly. It doesn’t hurt to weed out the bad keyword groups if they aren’t bringing you sales. The more you cut away, the better you can use your advertising budget for lucrative SEArches. That lowers the CPA significantly.
Number of conversions and conversion volume
The absolute number of conversions in a certain time gives you information about the growth of your campaign. Again, it depends on your individual goals whether 10 conversions per week or 500 conversions per week are “good”. It is important that this number moves upwards. The context plays a decisive role: In the end, it is of no use to you if you have twice as many conversions as before, but the turnover is lower because all new customers only buy small things. As you can see, almost all KPIs for PPC campaigns are interrelated.
The conversion volume is therefore a better metric. It does not describe the number of individual purchases, but their monetary turnover. Even modest growth has a positive impact on your ROI. If your conversion volume continues to grow, you can work on lowering your CPA and doing more for less.
CPC – cost per click and click price
The CPC is also useful for following certain developments in your campaign over time. Many advertisers instinctively think that a high CPC is good because it easily gets you and your ads to the top spots. However, this only applies if you state a really large daily budget. Otherwise, you’re just burning money. It makes more sense to keep the CPC as low as possible and as high as necessary. Bidding strategies like smart bidding will help you find a good balance.
It is quite time-consuming to manage the CPC in a larger campaign. Because you should be aware that different keyword groups require radically different strategies. You have to use these KPIs for PPC campaigns on the micro-level. Means: For every keyword group, no matter how small, you have to keep an eye on the market and set an individual CPC. This is not only based on the competition, but also on the expected turnover that you will make with this keyword group. If you sell cheap and expensive products in your online shop, the CPC for the more expensive items can be higher. If you work here thoroughly, you can use your advertising budget much more effectively and increase the ROI in the long term.
Quality Score
The quality score in itself is not metric and has no real meaning for your campaign. Even so, it is very important if you want to reduce the cost of?PPC advertising. Because the quality score directly influences the click price (CPC) and your position in the SERPs. You can find out how exactly the CPC is calculated and what influence the Quality Score has in our article about your ideal SEM budget.
Short refresher: The quality score is based on three factors:
The strongest lever to rank up here is a good, customer-centric landing page. It is the key to reaching the right customers and making the purchase decision as easy as possible for them. Google rewards the effort invested here with a small price reduction in the form of the quality score, which has a positive effect on all other KPIs for PPC campaigns.
Bonus: 5 KPIs for PPC campaigns that are only for vanity
As described in the introduction, there are several?KPIs for PPC campaigns. But not all of them really help you. You should therefore never base your decision on a KPI. In the following, we will show you why you will make wrong decisions with this approach. Especially if you overinterpret one of the following five KPIs.
Even if the CTR describes a relationship, it doesn’t really make sense as the only KPIs. With a brand campaign, you should of course try to achieve a high CTR. There are also cases where you should look forward to a low CTR. This is the case, for example, if you advertise on a keyword that is further away from the actual intention of your product – but you use the ad text to show that your product is an alternative to the keyword. Your goal is therefore to take the reach with you and to pre-qualify the user via the ads so that you get a few clicks as possible – but these are of high quality despite the not entirely matching keyword.
Conclusion: Know your goals, then you know your KPIs!
Phew, there were quite a few abbreviations and even more technical terms. In a nutshell: Not every key figure is always relevant. KPIs for PPC campaigns are closely related to the objective of the advertising measure. In our experience, many advertisers do not focus on the most important key figures, but on partly subordinate KPIs – sometimes because these figures are easier to understand, sometimes out of vanity.
You should define one or two key metrics (in the best case even per channel). The other KPIs support the core metrics. Sometimes it takes a professional’s eye to understand and classify the interplay and interaction of the key figures. Important: Depending on the advertising channel (SEArch/display) or advertising purpose, different KPIs for PPC campaigns can be in the foreground. You can evaluate values such as the CTR or the ROAS between SEM and display in a differentiated manner.
Summary