Defining Key AdWords Metrics

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Spending money on marketing is not new. But with digital advertising, especially the paid options available in Google, for every dollar you lay out, you can figure out how much you’re getting back. From actual revenue to gauging exposure, AdWords gives you extensive insights. You may still have to “spend money to make money,” but at least here you can make sure your money is working smarter.
But to do this, which metrics should you care about most when reviewing AdWords performance? With so much data it’s sometimes hard to tell. For starters, take a look at the sheer number of options you have in the interface for viewing metrics.

 

Google AdWords User Interface

 

You can add scores of metric columns via the interface, but more isn’t always better. For looking at top level data, there are a few specific metrics you should care about to pinpoint success.

In this article, we’ll review the top AdWords metrics and what they mean for your account, while helping you focus on what numbers matter most to your business’s bottom line.

Some Important Metrics

When you log into your AdWords account and select the “Campaigns” tab, you will see a see a screen like this one that provides a row of data for each campaign. The column headings for numeric values like Clicks, Impressions, Cost, etc. – these are called metrics.

 

AdWords User Interface

 

Clicks represent any time an ad is clicked, leading users to a landing page on the website. These can include clicks on the main ad copy, as well as on sitelink extensions pointing to other pages within the site.

Impressions represent any time an ad appeared. In a search campaign, an impression means the ad showed up in search results after a user’s query triggered it. In a display campaign, an impression means the ad showed up on a website via the Google Display Network. In a video campaign, an impression means the video appeared to a user, whether it was played to completion or not.

CTR stands for clickthrough rate and represents the percentage of impressions that resulted in clicks. The higher the number, the more relevant users found your ads, becasue they decided to take action beyond the initial impression.

CTR can vary widely based on both the industry and the type of campaign. In general, search campaigns will tend to have a higher CTR (often in 1-5% range) while display campaigns will fall in a lower range (0.1%-0.2%). While you can find data on industry benchmarks, the best benchmarks you can set are against your own historical performance. Make sure to monitor your data to see if CTR is increasing or decreasing over time.

Be careful though. A high CTR does not necessarily correlate with a positive campaign performance. When the end goal is to drive users to purchase products or services, a click-through isn’t enough to declare success. You could be driving a large percentage of searchers to your site with excellent ad copy, but a poor landing page experience could deter them from buying.

Average CPC (cost per click) indicates the average amount paid each time a click occurred. Since AdWords operates on an auction system, the cost for each individual click will vary based on factors such as maximum bid, quality score, and competitor bids for the keyword searched. The AdWords interface averages out the amount paid over time across multiple clicks for the time period you’re viewing.

As with CTR, driving CPC down over time can certainly be a positive trend for an account. However CPC should be balanced against end-goal metrics such as revenue and cost per conversion. If a particular keyword is more likely to drive high value leads, bidding for a higher CPC would be worthwhile to stay competitive.

Average Position indicates where on the page the ads appeared. This metric is viewable for both individual ads and keywords. Numbers represent position on the page, with 1 being the top position and higher numbers being progressively lower.

While the arrangement of ads in search results can vary, positions 1 through 4 generally represent ads showing above organic (unpaid) results, while 5 to 7 represent ads at the bottom of the first page. Any higher numbers indicate positions on the second page or further. However, note that based on the type of query and experiments happening on Google’s end, the number and positioning of ads can vary greatly.

A study by Advanced Web Ranking indicates that around half of searches result in clicks on the first three organic results (not even counting the ads appearing above those listings).

Based on this data, an ad placement at the bottom of the page won’t even enter consideration for the majority of searchers. If a keyword is showing positive performance and has a low position, you may want to raise the bid in an attempt to raise its position and expose it to more potential searchers. Of course, be careful about indiscriminate bid raising, even if Google suggests otherwise in its interface. Showing up at the top for every keyword shouldn’t be an end goal. Sometimes, showing in a lower position may be more likely to grab the attention of serious researchers, and potentially more valuable customers, who are carefully reviewing the options as opposed to blindly clicking the first link.

Conversions get to the heart of your campaign’s primary focus: driving trackable value to the business. If you haven’t done so already, you will need to set up AdWords conversion tracking to see proper data in your account.

A conversion is a goal you’ve defined, such as a contact form submission, phone call, free trial signup, or purchase completion. Look at conversions to pinpoint which campaigns, ads, and keywords are driving the highest volume of qualified leads or revenue for your company.

Cost/conv. shows the average cost for each conversion that took place. This metric should be considered a key indicator of success, taking precedence over CPC in determining how you set your bids.

You should work toward defining a target cost per conversion that accounts for the average revenue you make per lead or sale. However, this should also incorporate realistic expectations based on the competition around terms. From there, compare this metric across campaigns, ads, and keywords to determine which are most effective in driving end results and which need attention to improve.

Conversion rate indicates the percentage of clicks that resulted in users completing conversion actions. This should also be a key metric in determining where to focus bids. Conversion rate in another metric that indicates success beyond the point of the click to the landing page and reflects actual revenue for a business.

Of course, this metric can vary widely across industries and the type of conversion being promoted. If you’re simply trying to get people to download a resource to become part of an email list, a conversion rate of 5% to 10% may be expected. However, if you’re looking to convert to an actual purchase of a high value product, a conversion rate of 1% to 3% may still be considered effective. As always, benchmark against your own data and look for growth in conversion rate tied to various campaign elements.

Conclusion

In this article, we’ve provided a high-level review of what metrics mean in the AdWords interface and how to apply them to your business success. Ultimately, focus on tracking accurate conversion data and optimizing around cost per conversion and conversion rate. At the end of the day, the number of clicks and impressions are far less important than the qualified leads and purchases that result in revenue for your business.

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