If you're driving without paying attention to your surroundings, you're bound to have an accident. The same goes for running pay-per-click (PPC) ads without tracking key performance indicators (KPIs). You might be moving in the right direction, but you'll have no way of knowing how fast or how far you've come.
That is why KPI tracking and reporting are essential components of any PPC campaign. By tracking the right metrics, you can glean valuable insights into what is and isn’t, and make adjustments accordingly.
With so many KPIs to choose from, it can be hard to know which ones are worth tracking. To help you out, we've put together a list of five of the most crucial KPIs for any PPC campaign, along with a brief explanation of what each one measures.
What are KPIs in PPC advertising?
KPIs, or key performance indicators, are measurable values that indicate how well a campaign is performing against pre-determined goals. They provide targets for marketing teams to strive for, milestones to gauge progress against, and early warnings for when something isn't going as planned.
KPIs can be of two types – lagging or leading.
- Lagging indicators are retrospective. They tell you how well you did after the fact. Examples of lagging indicators include measures like website traffic, customer acquisition cost, and ROI.
- Leading indicators, on the other hand, are forward-looking. They give you a glimpse of what lies ahead. An example of a leading indicator would be something like time on site or pages per session.
Ideally, you want a mix of both lagging and leading indicators in your KPI list to get a holistic picture of your campaign's health.
What are the most important KPIs for your PPC campaigns?
Unfortunately, the answer to this question isn’t clear-cut and will depend on several factors, including your business goals, the products you provide, your target market, and more. However, there are some general guidelines you can follow to help you choose the right metrics to track.
To start with, make sure that your KPIs are:
- Specific. A KPI should be precise enough that you can take clear and direct action based on its results. For example, “website traffic” can be too broad of a metric to be useful on its own – you might need to break it down into more specific measures like “organic traffic” or “traffic from paid ads”.
- Measurable. This one is fairly self-explanatory – a KPI should be something that you can measure quantitatively and track over time. “Engagement” is a nice goal to have, but it's not very useful as a KPI because it can be a little difficult to quantify in many marketing scenarios.
- Attainable. Your KPI should be ambitious yet achievable: too easy, and you're not challenging yourself enough, too hard, and you'll only end up demotivating your team.
- Relevant. The KPIs should relate to the broader goals of the business. It makes no sense to track “time spent on site” if you're not trying to increase the amount of time people spend on your website.
- Time-bound. Attaching a deadline to your KPI will help you stay on track and motivated. “Increase website traffic by 10% in the next month” is a much more actionable goal than simply “increase website traffic.”
By working through these criteria, you can be confident that the KPIs you set for your campaign will be ones that will actually help you move the needle for your business.
7 key PPC KPIs to track
Now that we've got the basics out of the way, let's look at a few core PPC metrics that will help you shape your marketing KPIs for your next PPC campaign:
- Average CTR
- Cost per click (CPC)
- Conversion rate
- Cost per acquisition (CPA)
- Impression share
- Quality score
- Average position
#1: Average Click-Through Rate (CTR)
PPC campaigns live and die by their clicks. Without clicks, there are no leads, no conversions, and no return on investment (ROI). But clicks alone don't give you the whole story – you also need to look at how often your ads are being clicked relative to how often they're being shown. This is where the click-through rate (CTR) comes in.
Your ad's CTR will give you an idea of how effective it is at getting people to take action:
- A high CTR means your ad is relevant and interesting to your target audience and that it's being served to the right people.
- A low CTR shows that there might be something wrong with your ad – it could be that the copy is unappealing, the image isn't eye-catching, or you're serving it to the wrong audience.
Average CTR calculation
To calculate your ad's CTR, simply take the number of clicks it receives and divide it by the number of impressions. For example, if your ad receives 100 clicks and is shown 1,000 times, its CTR would be 10%.
What's a good CTR?
The answer to this question isn't black and white – it will vary depending on your industry, and the type of campaign you're running, among other things. Here's a chart from Wordstream that breaks down Average CTR by industry:
As you can see, some industries have much higher CTRs than others. For example, the average CTR for an ad in the “Arts & Entertainment” category is a whopping 10.67%, while the average CTR for an ad in the “Legal Services” category is a more modest 3.8%.
So, a good CTR for your campaign will depend on what industry you're in and what the average CTR is for that particular industry. However, as a general rule of thumb, Wordstream recommends that you aim for an average CTR of at least 6 to 7% for your Google Ads campaigns.
#2 CPC
CTR is a great metric to track, but it doesn't give you the whole story when evaluating your ad's click-worthiness. You also need to take into account how much each click is costing you. Because what good is a high click-through rate (CTR) if it comes at a high cost per click (CPC)? Combined, these metrics will give you a good idea of how effective your ad is at driving clicks while still being cost-effective.
CPC calculation
CPC is determined by dividing the total cost of your clicks by the number of clicks it received. For example, if you spend $100 on an advertising campaign that generates 1000 clicks, your CPC would be $0.10.
As a tip, if you're gunning to keep your CPC low, try to bid on long-tail keywords – these are keyword phrases that are more specific (and usually less competitive) than shorter, more general keywords. Tools like Semrush, Ahrefs, and Ubersuggest can help you find the average CPC for each keyword so that you can budget wisely.
What’s a good CPC?
Similar to CTR, there is no definite answer as to what makes a “good” CPC. It will vary depending on your industry, the type of campaign you're running, and other factors.
In general, though, a good CPC is one that's low enough to ensure a high ROI. Most businesses translate a “good” CPC into a CPC that's below their maximum cost of generating a customer acquisition through your campaign (CPA), as this ensures that they're making a profit on each sale.
To get an idea of what the average CPC is like in your industry, you can refer to the chart from LocaliQ:
#3 Conversion rate
PPC conversion rate measures the percentage of people who take the desired action after clicking on an ad. This desired action could be making a purchase, completing a contact form, requesting a free trial, or anything else that is aligned with your campaign goals.
By measuring your conversion rate as a KPI, you can:
- Get insights into which parts of your marketing campaign are working and which parts need improvement. For example, if your ad copy generates clicks but has a low conversion rate, that may be due to issues with your landing page content or funnel process that are preventing users from converting.
- Determine whether your ads are driving enough conversions to justify their cost. If you’re spending a mountain of money on ads but aren’t seeing a decent return, you may need to reevaluate your strategy.
Conversion rate calculation
To calculate your conversion rate, you need to know what “conversion” means for your particular campaign. For example, if you're running a campaign to generate leads, a conversion would be counted when someone submits their contact information via a form on your website. But if you're running an eCommerce campaign, a conversion would be counted when someone adds an item to their cart and completes the purchase.
After you've determined what counts as a conversion, you can calculate your conversion rate using this formula:
Conversions ÷ Total Clicks x 100 = Conversion Rate
So, if your ad generated 1000 clicks and led to 10 conversions, your conversion rate would be 1%.
What’s a good conversion rate?
To get a good conversion rate from your Google Ads, aim for a rate that is higher than the average. The average conversion rate for Google Ads is 3.75%. However, the top advertisers on Google Ads have an average conversion rate of 11.45%. So, if you want the best conversion rate, you should aim for a number that is closer to 11.45%.
Of course, the “right” conversion rate will also depend on your unique business goals, target audience, and other variables – so don't get too hung up on achieving a specific number right off the bat. Instead, focus on steadily increasing your conversion rate over time through continual optimization and experimentation. Here’s a helpful conversion rate benchmark chart from Wordstream that covers some key industries:
#4: CPC/ CPA
Cost per conversion (CPC) or cost per acquisition/action (CPA) is a valuable tool for gauging the effectiveness of your PPC campaigns. It measures the amount of money you spend to acquire a customer or complete the desired action, such as a purchase or lead.
CPC/CPA calculation
To calculate your CPC or CPA, just divide the total cost of your conversions by the number of conversions.
For example, if you spent $100 on your PPC campaign and it generated 10 conversions, your CPC or CPA would be $10.
What’s a good CPA?
To get the most bang for your buck, focus on CPAs that bring in plenty of new customers at a price that doesn't eat into your profits too much. Below is a helpful CPA chart that has data from across a variety of industries:
While there's no magic number for what a “good” CPA is, in general, you should aim for a CPA much lower than your customer’s lifetime value (LTV). LTV is the total amount of money that a customer will spend with your business throughout their relationship with you. For example, if the average customer spends $500 with your business, you would want your CPA to be lower than $500.
#5: Impression share
Impression share is a metric that assesses how often your ad is seen in comparison to other ads in its category. This is done by looking at the total number of impressions your ad has received and comparing it to the number of potential impressions it could have received.
Impression share can be useful in a few different ways:
- For starters, it can give you an idea of how effective your ad content or targeting is. For example, if your ad's impression share is up but clicks haven't increased, that's an indication that your ad is being seen but people aren't finding it relevant. However, if your impression share is down but clicks are up, that means your ad is being served to fewer people but the people who are seeing it are finding it relevant.
- Impression share can also help analyze how your ad performance stacks up against your competitors. If your impression share is 40%, for example, that means that 60% of the potential impressions in your market are going to your competitors. This metric can be a valuable way to benchmark your performance and set goals for improvement.
Impression share (IS) calculation
Depending on the ad campaign, the total number of eligible impressions may vary. Google takes into account things like targeting settings, approval statuses, and even the quality of your ad when working out this number.
Once the maximum number of impressions is determined, all you have to do is divide the sum of actual impressions the ad receives by that number.
IS = (impressions / eligible impressions) x 100
What is a good impression share?
100% would be the perfect score, but obviously, that's not always possible (unless you're the only advertiser in your market!) But you should try to get as close to that number as possible.
A good impression share will again depend on your industry, the objectives you're pursuing, and the keywords you're using. If you're working with branded keywords, a good impression share is usually anywhere from 85-95% whereas a good benchmark for non-branded keywords should lie around 70-80%.
But if you're competing with the big players in your industry and don't have a large budget, then shooting for a 60% search impression share is a sensible target. Anything less than that means it's time to optimize and pay attention to aspects of your campaign that will help maximize impression share.
#6 Quality score
Quality Score is a metric used by Google Ads that assesses the overall quality of your ad campaigns. Generally speaking, a high-quality score signifies a greater likelihood of appearing in search results and reaching users.
Quality score calculation
Google calculates quality scores based on multiple factors, including your click-through rate (CTR), keyword relevance, landing page quality and relevance, ad text relevance, and past account performance.
Now, it's tough to say exactly how much each factor weighs in the overall calculation as Google doesn't disclose that information. But most advertisers speculate that CTR holds the most influence since a high CTR indicates that users find your ad helpful and relevant. And Google is all about delivering the best, most relevant search results to its users.
What is a good Quality Score?
The quality score is measured on a 0-10 scale, with 5 being the average. A great quality score is typically 7 or above which means that you will pay less for your AdWords campaign. If your score is lower than that, it's a sign that you need to work on improving the quality of your ad copy and landing page. You can consult this chart for a better understanding of how your quality score impacts your cost per click (CPC):
#7 Average position
Just like the name suggests, average position refers to where your ad typically ranks in search results compared to the ads of other advertisers. This metric is important because it often directly impacts the success of your ad campaigns, as higher positions typically lead to more clicks and conversions.
Average position calculation
Ad position is Google's way of rewarding advertisers for the quality of their ad campaigns, rather than just giving the top spot to the advertiser with the highest bid. Your position is determined by your ad rank, which is calculated by multiplying your maximum cost per impression with your quality score.
What is a good average position?
Most advertisers aim for a position of 1-3, as those are the spots at the top of the search results page where users are most likely to click. However, depending on your industry and competition, it may not always be possible to achieve this. If so, aim for a position as close to 1 as possible.
But keep in mind that a lower average position does not necessarily mean your ad is performing poorly; it could just mean that you are facing tougher competition. In fact, in some cases, a lower average position can actually be more advantageous depending on the goal of your ad campaign. So while it's essential to monitor your average position, don't get fixated on achieving a top spot at all costs.
Getting started with tracking PPC metrics
Tracking PPC metrics is essential for understanding what's working and what needs to be improved in your campaigns. But if you're just getting started with tracking and reporting, it can be an overwhelming task. Here are a few tips to help you ease into it:
Tip #1: Use the World Wide Web to your advantage.
Throughout the Internet, you will find numerous tutorials, videos, and guides on PPC metrics tracking. A simple Google search will reveal many helpful resources that you can use to get started with monitoring and reporting.
Additionally, there are many PPC reporting templates available online that can help you streamline your reporting efforts. Plus, you can easily customize these templates to suit your specific needs.
Tip #2: Invest in PPC reporting tools.
Many PPC marketers lose hours every week grappling with convoluted spreadsheets keeping track of all their metrics. Fortunately, there are now a number of PPC reporting tools that can simplify and automate this process.
These tools can help you save time by automatically generating reports on how your campaigns are performing against your KPIs. They also make it easy to share these reports with clients or team members. And some even offer features like custom branding, which can give your reports a more professional look. Some popular PPC reporting tools include Google Data Studio, DashThis, and Databox.
Tip #3: Have a resource plan in place.
Too often, PPC marketers get caught up in the day-to-day tasks of running campaigns and lose sight of long-term goals because they don't have the time or resources to do so.
Before diving headfirst into PPC metrics tracking, take a step back and assess your current resources. Do you have enough people and/or time to regularly monitor and report on your campaigns' progress? Do you have the necessary technology or tools to do so effectively?
After analyzing your resource capacity, create a plan for obtaining any missing resources and establish a schedule for tracking and reporting on PPC metrics. This will ensure that you have the foundation you need to track and optimize your campaigns for success effectively.
Tip #4: Hire a digital marketing agency that specializes in PPC.
If managing and optimizing your PPC campaigns sounds like too much work, then you can always outsource this task to a PPC management agency.
Most digital marketing agencies specialize in all things PPC, from tracking and reporting to optimization and bid management. This means you can focus on other aspects of your business while leaving the nitty-gritty details of PPC to the experts.
Plus, digital marketing agencies usually have access to knowledge and resources that you might not have, which can help you get the most out of your PPC campaigns. But make sure to choose an agency with extensive experience in PPC management, a strong track record of results, and a good reputation.
A great way to ensure this is to ask for referrals from other businesses in your industry. You also want to ask about the agency's transparency policy to make sure they're open and honest about their work. The best approach here is to prepare a questionnaire and have your shortlisted agencies fill it out. Just like how social media agencies use onboarding questionnaires to get an understanding of their client's needs, this will give you a good starting point for comparing agencies and making the best decision for your business.
Track your PPC KPIs
Engineering a successful pay-per-click campaign is no small feat. Between managing budgets, researching keywords, designing ads, optimizing campaigns, and analyzing results, there's a lot to keep track of!
But by focusing on the right metrics – i.e., those that are meaningful to your larger business goals – you can streamline your efforts, save yourself time and energy, and ultimately achieve better results.
