Reviewing your AdWords performance can be pretty overwhelming. Not only are there dozens of metrics and ways to slice and dice the data, but you're also receiving performance results in near real-time. In this post, I'll give you an overview of your AdWords dashboards to help you get familiar with the analysis that guides your optimization.

1. Understanding The Tables

Your AdWords performance data is compiled in tables with performance metrics in columns and the different entities (campaigns, ad groups, ads, etc) in rows. Since entities have a hierarchy, you can drill down into the tables at each level to see more granular data.

2. Focusing By Sorting

When analyzing your tables, whether it's for keywords, ads, or any other entity, you'll want to first sort it by a metric in order to focus.

1. Set your date range to a time period with broad and recent data, like the last 30 days.
   
2. Sort by the metric you’re analyzing (Clicks, CTR, Cost, etc) in descending order.
   
3. Take action on the entity that's lagging in the metric relative to others. Here are some examples:
   • Low CTR - This means people aren’t clicking on your ads when they appear. This could be because your ad isn’t compelling enough, or it may be irrelevant to what the person is searching for. Try creating new ads that are more compelling, or add negative keywords to filter out irrelevant searches.
   • Low Impressions - This means your ads aren’t running very often. While this may be because search volume on this keyword is low, it could also be because your bids are too low or your quality score is too low. You'll know for sure by viewing the " Lost  Impression Share " columns. Try raising your bids in order to top competing advertisers, or create more relevant ads in order to improve your quality score.
   • High Cost/Conversion - This means your cost is too high for the amount of conversions you're receiving. This could be because your bids are too high and/or your conversion rate is too low. Try reducing your bids to lower your overall cost, or create new ads that are more up-front about your offer in order to limit clicks from people that won’t convert, thus improving your conversion rate and lowering your cost. This post will help you qualify customers with your ads.

3. Analyzing Keyword Performance

Keywords control who sees your ads and how much you’ll spend for each click. Your optimization goal is to focus your budget on the best keywords, those most likely to result in conversions. You do this by investing in high-quality keywords and pausing (or demoting by way of bids) low-quality keywords.

Some key metrics to look for are:

• Clicks - How many times its ads were clicked
• Impressions - How many times its ads appeared
• Cost - How much money it spent
• Max CPC - What the maximum cost per click bid is
• Avg. CPC - What the cost per click is on average
• Avg. Position - Where on the page its ads showed up on average
• Conversions - How many conversions it earned
• Cost/Conversion - How much it cost to get each conversion on average
• Conversion Rate - How often did clicks result in conversions

4. Analyzing Ad Performance

Ads control the messaging your customers see and what page of your website they’ll be directed to if they click. Your optimization goal is to run the best ads, those most likely to result in conversions. To do this, create relevant ads for the keywords in each ad group, test frequently and pause your low-performing ads.

Some key metrics to look for are:

• Cost/Conversion - How much it cost to get each conversion on average
• Conversions - How many conversions it earned
• Cost - How much money it spent
• CTR - How often it was clicked when it appeared
• Conversion Rate - How often its clicks resulted in conversions
• Clicks - How many times it was clicked
• Impressions - How many times it was shown

5. Analyzing Campaign Performance

Campaigns (and the ad groups within them) house the keywords that target searchers and the ads that present your offer to searchers. Your optimization goal is to allocate money towards your best performing campaigns: those most likely to result in conversions. To do this, rank your campaigns by their cost/conversion (lower is better) and, starting with your best campaign, make sure the daily budget is greater than its average daily cost. Continue this process until your complete budget has been fully distributed. Of course, if your campaigns are bringing in more money than they’re costing you, you have a positive ROI and you should put more money towards your PPC budgets.
Some key metrics to look for are:

• CTR - How often its ads were clicked when they appeared
• Conversion Rate - How often its clicks result in conversions
• Clicks - How many times it was clicked
• Budget - How much money (per day) is budgeted
• Impressions - How many times it was shown
• Conversions - How many conversions it earned
• Cost/Conversion - How much it cost to get each conversion on average

6. Analyzing Performance Over Time

While the tables present aggregate performance data for a given time period, they fail to show you how metrics fluctuated over time. Because of this, it's helpful to review line graphs to see how and when a metric has changed. Look for peaks, valleys and trends to measure the impact of changes you've made, along with the affects of seasonality and changes in the competitive landscape.

Make an effort to dig into your performance tables and get comfortable navigating between them. Try segmenting your data in new ways. Explore the different metric columns and read their tooltips to get familiar with them. There's no reason to be intimidated by the data... just dig in!