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Do you feel like your paid search campaigns are stuck in a rut? Are you struggling to take it to the next level and don’t know where you’re going wrong? If so, you’re not alone.
Success in paid search marketing comes down to monitoring the right key performance indicators (KPIs). These KPIs provide insight into your campaigns’ effectiveness and give you the information you need to meet objectives and improve your key results.
So if you’re trying to boost your revenue and visibility, here are eight important KPIs your agency should monitor in paid search campaigns.
Why KPIs are important in paid search
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Numbers are every digital marketer’s shield and sword. Think of KPIs as your arsenal: They provide the ammunition you need to measure success and optimize campaigns. Without data, you’re flying blind — you don’t know what works, what doesn’t, or where your campaigns need improvement.
Tracking your KPIs helps you analyze the effectiveness of your digital marketing campaigns, identify improvement areas, and better understand how to allocate resources. You can also see how your campaigns stack up against the competition and come up with new strategies to help your clients stand out.
In short, you can adopt a more data-driven approach to your PPC campaigns instead of relying on intuition and guesswork.
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Determining the goals of your PPC campaign
Pay-per-click (PPC) campaigns are a versatile digital marketing tool. You can use them to increase website traffic, promote brand awareness, generate leads, and boost conversion rates.
When done right, PPC campaigns generate measurable results quickly and cost-effectively. Unlike other marketing strategies, like SEO (search engine optimization), PPC campaigns deliver results in a shorter time frame.
Determining your goals is the first step in developing a successful PPC campaign. For example:
What are you trying to accomplish?
What do you expect out of your PPC campaigns?
Do you want to drive more qualified leads?
Boost brand awareness?
Generate more conversions?
Defining all of this upfront will help you determine which KPIs are the most important for tracking and benchmarking performance. For instance, if you’re aiming for more website traffic, then click-through rate (CTR) would be a key performance indicator to focus on, while brand awareness campaigns prioritize impressions and reach.
Knowing your goals will also give you a better sense of what success looks like and the performance level you should aim for. Use your goals to set realistic targets for each KPI, then focus on developing and executing a winning PPC strategy.
8 paid search KPIs to measure performance
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The KPIs you should be tracking will depend on your campaign goals, industry benchmarks, and budget, and if you choose the wrong KPIs to focus on, you’ll end up with inaccurate data and skewed results. Here are eight of the most important KPIs to track in paid search campaigns:
1. Click-through-rate (CTR)
The ultimate goal of a PPC campaign is to generate clicks through valuable, relevant ads. When your target audience clicks on your ad, it takes them to your website or landing page, where (hopefully) they become a paying customer or client.
CTR measures the number of clicks you get for each ad impression. From this data, you can evaluate the success of your ad copy, targeting, and bidding strategies. If your CTR is too low, you can put your campaign on hold or modify it for better performance.
Divide the number of clicks by ad impressions and multiply it by 100 to calculate your average CTR. For instance, if you get 500 impressions and 100 clicks, your CTR would be 20% (100/500).
Of course, this begs the question: What is a good CTR?
That depends on your industry, keywords you’re targeting, and competition, but according to WordStream, the average CTR across all industries in 2023 is 6.11%. You can improve your CTR by optimizing ad copy, tweaking target audiences, and running A/B tests. Negative keywords, placing special offers in the headlines, and including a CTA (call-to-action) will also deliver a high CTR.
2. Cost-per-click (CPC)
Okay, that’s a lot of acronyms so far, and we’re not done yet. Next up: CPC. To figure out your ad campaign budget, you need to know the cost-per-click of each keyword you’re targeting. CPC is the amount you pay each time a user clicks on your ad. It’s the simplest PPC KPI to calculate — just divide the total cost of your ad by the number of clicks it received.
This metric helps you understand how much each click costs you — and if it’s worth it. The same WordStream study cited above finds that the average CPC across all industries in 2023 is $4.22, with attorney and legal services topping the list at $9.21, while travel and real estate have the lowest at $1.63 and $1.55.
A higher CPC usually means more competition or a low-converting keyword. You can raise your quality score (more on this later) and reduce your CPC by optimizing your ad copy and keywords, narrowing your targeting, focusing on long-tail keywords, and experimenting with different bids.
3. Conversion rate
This is the most important KPI in PPC advertising.
Driving traffic to your website or landing page is only half the battle — you have to convert that traffic into paying customers, leads, or subscribers. After all, you don’t want to waste money just paying people to window shop.
Conversion rate measures the percentage of visitors who engage with your site by making a purchase, subscribing to a newsletter, filling out a contact form, etc.
Tracking your conversion rate shows you how well your ad campaigns generate new leads, increase sales, or boost engagement.
You can calculate the conversion rate by dividing the number of conversions by the total number of clicks and multiplying by 100. Conversion rates vary by industry, but you should aim for a 2-5% rate. Conduct A/B testing, set up a sales funnel, and include social proof to boost conversions.
4. Return on ad spend (ROAS)
PPC marketing is an investment — one that should generate a return. After all, what’s the point of spending money on ads if you don’t make a profit? (Unless you’re just looking to catch a break on your taxes — in which case, carry on.)
Return on ad spend (ROAS) measures campaign cost vs. profit. So you calculate your ROAS by dividing the revenue you generate from your ads by the total cost of your campaigns.
For instance, if you spend $1,000 on your campaign and generate $6,000 in revenue, your ROAS is 6:1 or 600%. While there’s no universal “right” ROAS, 4 (4:1) and up is a common benchmark for a “good” ROAS. This means that for every $1 you spend on ads, you get back $4 in revenue.
Your ROAS will improve over time as you gain more data and fine-tune your campaigns. Focus on expanding your customer lifetime value (LTV), segmenting your target audience, and creating high-converting landing pages.
5. Quality score
Quality score is a rating Google assigns to each of your keywords based on relevance, user experience, CTR, and the quality of your landing page. It ranges from 1 to 10, with the higher scores indicating better performance.
Think of it like your credit score but for paid search. A higher credit score gets you better interest rates, while a higher quality score reduces your CPC, improves ad position in the search engine results pages (SERPs), and increases conversions.
Your quality score metric affects your overall PPC campaign success and how much you pay per click, so monitor your Google Ads account performance regularly and adjust your campaigns accordingly. Use highly-relevant keywords, optimize ad copy to match search queries, and create a user-friendly landing page with a clear CTA to boost your quality score.
6. Average position
Average position measures your ad rank in SERPs, which determines how visible your ad is to potential customers. The higher your ad rank, the more likely you will get clicks and generate conversions.
Several factors determine your position, including bid amount, quality score, and ad relevance. Multiply your quality score by your maximum cost per impression to get your ad rank. You can track and improve your average position by adjusting bids, optimizing ad copy and keywords, and running A/B tests.
7. Cost per acquisition (CPA)
Cost per acquisition (CPA) or cost per conversion (CPC) is the amount you pay for each customer acquired through your ad campaigns. It’s a key metric for tracking the effectiveness of your campaigns and making smart budgeting decisions.
You can calculate your CPA by dividing your total ad spend by the number of new customers brought in over a certain period. Your CPA should be lower than your LTV — meaning you profit from each new customer.
Since your quality score highly influences your CPA, make sure you optimize your ad copy and keywords for relevance. Target high-value customers with personalized ads to reduce CPA, optimize bids based on location, time, and device type, and use lead scoring for higher ROI.
8. Return on investment (ROI)
Unlike RAOS, return on investment (ROI) measures profitability across all marketing activities, not just paid search. It tells you how much money you make for every dollar you invest in marketing, including PPC, SEO, social media, and email marketing.
You calculate ROI by subtracting your initial investment cost from your total revenue generated and dividing that value by the cost of your marketing campaigns, then multiplying it by 100.
A positive ROI means you’re making a profit from your campaigns, while a negative ROI shows that you’re losing money on your marketing efforts. Revisit your ad campaigns, adjust bids and budgets, and target high-value customers to boost ROI.
Manage and execute your paid search campaigns with Teamwork
Paid search campaigns, when executed correctly, can be game-changers, but it takes time, effort, expertise, and a little trial and error to get them right. A successful PPC campaign requires constant monitoring and tweaking, and that’s exactly what you need, right? Another tedious task on your plate.
So if the thought of PPC campaign management makes you want to crawl under your desk and take a nap, try using the right tools for the job. Teamwork offers powerful project management tools to help you stay organized and manage multiple campaigns across different platforms.
From task management and budget tracking to in-depth reporting and analytics, Teamwork makes running PPC campaigns a breeze. Get in touch today to sign up for a free trial and get started on your PPC journey.
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