It goes without saying that if you’re running advertising online - or offline, for that matter - you should be accurately tracking certain metrics (KPI dependent) to understand what’s working, what isn’t and what your spend is delivering.
Having said that, there are so many metrics out there - where do you start? Some metrics are far more useful than others; most metrics are interesting in one way or another, but you need to ask yourself whether what you’re tracking is for vanity or utility.
Why You Should be Tracking Metrics
Again, this seems obvious, but we still encounter brands and businesses not tracking - or properly tracking - business critical advertising metrics. At a time when access to performance data is as easy as it’s ever been, this is almost mind-boggling.
Put simply, if you’re not tracking the metrics key to the performance of your chosen platforms you’re essentially advertising/marketing with blinders on. If you’re taking this approach there’s almost certainly a handful of things you could accomplish today that would optimise your campaigns and deliver a performance uplift.
The 5 Best Metrics for Tracking Ad Performance
So, what metrics should you be tracking?
To a certain extent, the answer to that question will depend on the nature of your business, what your KPIs are and the types of advertising you’re investing in. But, generally speaking, there are a handful of metrics that our teams find the most useful. None should be used in isolation and all have their positives and negatives.
With that in mind we went out to the entire SearchStar team and asked the question; “what is your favourite metric for tracking ad performance?”. The result? The 5 best metrics for tracking ad performance (in reverse order).
5) Average CPC (6.9% of the vote)
What is Average CPC?
CPC stands for cost per click. This metric is the average amount you have spent on a click on your ad. It is calculated by dividing the total cost of your clicks by the total amount of clicks.
Why Average CPC is Useful
Average CPC helps you to understand how much you are paying for each click on your ad. Some keywords will have a higher CPCs than others, but this metric will give you an average. Average CPC is available at keyword, ad group and campaign level so it helps to show you where you are spending your budget.
When it comes to decision making, average CPC is useful for deciding whether to add keywords to the account. As mentioned, CPCs vary depending on the keyword so sometimes it won’t make financial sense to add a keyword to your mix if you judge it to be too expensive.
It’s also a useful metric when deciding whether to increase bids as it will tell you how much, on average, you are already paying. Average CPC is an important metric but is often used in conjunction with other metrics for decision making.
Finally, average CPC is a useful metric to measure over time. It will provide you with extra detail when looking deeper into peaks and troughs of performance. It can also help you to understand fluctuations in the keyword market regarding competition and seasonality.
The Downside of Average CPC
CPCs vary from keyword to keyword and industry to industry. The fact is that some people can be put off using certain keywords if their average CPC is too high, but does it matter if you are making money or driving valuable leads from those keywords?
Another issue with average CPC is that it doesn’t tell you an awful lot on its own. To get the best out of average CPC you will need to use it alongside other metrics. Only when you are using average CPC with other metrics will you start to understand the full picture.
4) Impression Share (10.3% of the vote)
What is Impression Share?
Impression share is the percentage of impressions that your ads receives compared to the total amount you could get. It is calculated by taking the number of impressions you receive, divided by the total impressions you were eligible for. Eligibility for an impression is based on a mix of targeting sessions, bids and quality scores.
Why Impression Share is Useful
Impression share will help to explain how your campaigns, ad groups and keywords are performing. By showing how often you are appearing in searches that you are eligible for you can start to gain insight into how exposed your ads are. The higher the impression share, the more your ads are being viewed by users, which can improve brand recognition.
It’s a useful metric for comparing against competitors. By comparing impression share against competitors you can gain an understanding of how competitive you are. For example, if your main competitor has a higher impression share than you on your most important keywords, then you may want to look at why. You can increase your impression share by improving your ad rank or increasing your budget.
Impression share can also help you to optimise towards your best performing keywords. If you have keywords that perform well but have low impression share, they are not being fully optimised. You will want to get the highest impression share on your best performing keywords to give you the most exposure and the best chance of reaching your target customers.
The Downside of Impression Share
Improving impression share can be costly. You will often find you are losing impression share to rank, and one way of improving that is to increase bids. Although this is likely to improve your ad rank, and therefore improve your impression share, you are likely to see costs increase. Before rushing to increase your bids, you should first look to improve your quality score.
3) Conversion Rate (10.3% of the vote)
What is Conversion Rate?
Conversion rate represents the percentage of users that convert when they visit your site. The calculation is conversions divided by click which is then presented as a percentage. The bigger the number the better.
Firstly, conversion rate helps us to understand how effective the website is. It helps us to understand how the site performs in terms of working towards the action you want the user to take, whether that be buying an item or completing a form.
Conversion rate also tells us how the changes you make to your site when optimising influences your site visitors. Conversion rate could be influenced by something as simple as colour, font size or conversion path so it’s important to always be looking to improve it.
But almost everything on your website feeds into conversion rate in some way. For instance, any good content marketing strategy will seek to optimise to drive conversions or achieve a wider business objective.
Conversion rate is an important metric when it comes to decision making. When you are looking to optimise your ads, you will want to optimise towards areas that have a higher conversion rate. With paid media you are buying clicks so optimising towards conversion rate is logical as you will want to make the most of your budget and get as many users converting as possible.
The Downside of Conversion Rate
Conversion rate is not a universally useful metric. Some people are interested in just driving volume to their site and raising awareness, and therefore conversion rate is not entirely helpful. It also doesn’t necessarily mean performance will improve. For example, if your conversion rate decreases but traffic increases then the actual volume of conversions can be unchanged.
Finally, when optimising towards conversion rate you will want to look across other metrics. You will want to look across other metrics such as CPCs, CPAs and impression share to ensure it is the most useful way of optimising.
2) Cost per Action, CPA (17.2% of the vote)
What is CPA?
CPA stands for Cost Per Action and is used to work out the average cost per conversion. It’s calculated by taking the cost and dividing it by the total amount of conversions. This metric will consider any conversion you are tracking.
Why CPA is Useful
CPA is an important metric for understanding how much you are paying on average for a conversion. Usually people have a good idea on how much they are willing to pay for conversion, which depends on how much value that conversion drives.
You want to get more out of PPC than what you put in and setting a CPA goal helps to make that achievable. CPA is therefore an extremely useful KPI.
One of the main reasons we use it is to measure efficiency. Driving 100 conversions for £20 each is a lot less efficient than driving 100 conversions at £5 each. Improving the efficiency of your PPC campaigns will mean you have more budget to drive additional conversions and expand your digital activity.
As a metric, CPA helps with optimisation. Once you know what the most efficient areas of your account are, you can start to optimise towards it and scale them up. By increasing your budgets in your most efficient areas you will be able to drive more conversions within your budget while you capture the low hanging fruit.
The Downside of CPA
You can have a low CPA in areas that are not as valuable to your business as other areas. Focusing solely on CPA can mean you miss opportunity in higher value areas. It is therefore important to know how much you are willing to pay for a conversion especially if the value varies.
Focusing on CPA when optimising can also be misleading, especially if conversion and click volume is low. You need to consider CPA as well as other metrics when optimising. Your CPA could be skewed by having one conversion from one low cost click.
1) Conversion Value / Cost (31% of the vote)
What Conversion Value / Cost?
Conversion Value / Cost is exactly that. When you take the conversion value that your ads have driven and divide it by your advertising spend you get your return on ad spend or ROAS.
Why Conversion Value / Cost is Useful
ROAS is an extremely useful and effective metric for ecommerce clients. The revenue-based metric is an easy way to measure how profitable your ads are so the higher the number the better. It can be used to measure overall performance of an account and help paint the bigger picture.
It can, however, also be used when digging deeper into the data. Looking at ROAS at campaign, ad group, keyword or ad name level can give you deeper insights into what performs the best for you.
As with most of the metrics, we use ROAS to optimise. When using ROAS to optimise you know you are operating based on profitability, so it is always a good place to start. It can also help to provide useful information that can be fed back up and be used when making business decisions.
The Downside of Conversion Value / Cost
ROAS only works well if your conversions have a value which is mostly ecommerce clients. There is also not one target ROAS that will work for all businesses as some will require more than others to stay profitable.
The same can apply within one business as different products have different profit margins. Therefore, in some cases ROAS will need to be looked at differently based on different profit margins. ROAS is most definitely an important metric, however to get the most out of it, it should be used alongside others and put into context.
There is one consistent theme emerging here; it’s important to never rely on just one metric. You will need to look across all these metrics and more for a holistic view as there is no one size fits all metric that should be looked at.