Following certain key parameter indicators is vital for running a successful pay-per-click advertising campaign for your business. It will give you a much better insight into the performance of your ad groups and show you precisely what you need to improve in order to make them more effective. However, knowing which KPIs are important in PPC advertising is not always easy.
Luckily, experts from Alpha Efficiency decided to share the most significant KPIs they follow during ad campaigns and how this benefits their clients’ businesses.
Essential KPIs for every PPC campaign
- The Average Click-Through Rate
Click-through rate (CTR) shows the percentage of people who clicked on your ad after seeing it. This is a great indicator that directly shows your campaign’s success, as high CTR means that users believe your ad is relevant before clicking. It also shows that your business’s offers are intriguing, which is always a good sign. However, this KPI does not provide you with full insight into your ad performance, as a high click-through rate will not mean much to you if your conversion rates are still low.
Click-through rate is easy to calculate. It is calculated by dividing the total number of impressions by the total number of clicks for a certain period. The average CTR is around 3%, but it varies significantly from industry to industry.
- The Conversion Rate
High click-through rates combined with low conversion rates will empty your budget eventually. That is why conversion rate is a vital key indicator for every PPC campaign. It is crucial to note that ‘conversion’ is not limited to the scenario in which a customer buys a product. Depending on the goal of your PPC campaign, it could also happen when someone signs up for your newsletter, schedules a meeting, or participates in any scenario you choose.
An average conversion rate is around 3.7%; however, do not despair if you notice lower percentages, especially if you offer products or services requiring more persuasion before a customer makes the buying decision.
Professionals from PPC agencies will know how to determine whether your campaign is successful after analyzing the situation in your industry. Maximizing conversion rates should be the ultimate goal for every business engaging in pay-per-click advertising.
- The Quality Score
Quality score of your ads is a vital factor Google algorithms use to determine whether you should be given an advantage over the competition when it comes to ad displaying. It is quite an abstract metric, as other PPC metrics influence it. Let’s see what has an impact on the quality score of your ads:
- Your click-through rate
- Your ad relevance
- Quality of your landing page (page speed, mobile-friendliness, user experience, and others)
Your quality score is presented on a 0 to 10 scale, with the range of 7-10 being considered good. The higher your quality score is, the less you will have to pay to make your ads appear to users. Increasing it could save your business time and money during PPC campaigns.
- The Average Cost Per Click
The Average Cost Per Click or CPC is a critical KPI to follow, as it helps you plan your bidding strategy better. It essentially shows you the estimated amount of cash you will pay each time someone clicks on your ad. If the average CPC is too high, it might not be worth bidding for that ad, as your return on investment might become negative.
This key parameter indicator is calculated by dividing the total amount of money you spent by the total number of clicks. The average CPC is around $2.7 across all industries, but again, it varies from industry to industry.
- The Impression Share
The Impression Share is a simple key parameter indicator that shows you how many people have seen your ad. Even though impressions do not have any value if people do not click on your ad and convert later, this KPI can give you a general idea of your PPC campaign performance compared to the competition. Increasing your impression share will reduce the chances of a competitor’s ad being seen.
The impression share is calculated by dividing the total number of times your ad was shown to a user by the total number of times it was eligible to show up.
A good impression share is considered to be 70%. However, until you achieve 100%, you should not be totally satisfied, as there is still room for improvement.
Final Thoughts
Key parameter indicators are useful metrics you need to follow to maximize the effectiveness of your online business advertising. If you set up a PPC strategy without determining which KPIs need to be followed, your advertising campaigns will rely on pure luck and intuition, and you will not know what slight adjustments to make in order to increase return on investment.
