A pay-per-click advertising campaign (PPC) can be a good investment for your business. The cost-per-click or PPC model is used to drive traffic to your website. You only need to pay when a user clicks on your ad.
But you will not know if the sponsored link campaign is a good investment if you analyze the results to make sure you get the most out of your advertising budget. Whether you manage to advertise for your own business or customers.
you’re getting an appropriate Return on Investment (ROI).
How do you know what to monitor, analyze and adjust?
We are here to help you with our tips on how to measure the effectiveness of your PPC investments. Using the 6 Key Performance Indicators (KPIs) we describe here, you will be able to evaluate the performance of your campaign.
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As with any aspect of your business, it’s important to set goals for your campaign before you start. Having goals means that you can analyze your results against these goals and make adjustments if necessary.
Your goals will also determine which key performance indicators you can focus on.
Examples of goals for your campaign:
Registration of clients to receive emails or regular newsletters, to enable you to develop a customer database.
- Generate traffic to your website.
- Converting this traffic to sales.
- Increasing recognition of your brand.
Once your advertising goals are set, you can set up your campaign as well as monitor and review the results.
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To do that, here are the 6 KPIs on which you should focus.
You’ll never be able to reach a campaign goal without users clicking on an ad, whether it’s a brand improvement or a sales conversion. Therefore, the number of clicks is an important measure.Let your campaign run for a while and keep watching for clicks. They can be an early indicator of success, but as the campaign progresses, you may want to make adjustments. This can include hanging ads that are not performing well and increasing the bid for ads that perform well.
Click Through Rate (CTR)
Clickthrough rate is another key metric that is calculated by dividing the total number of clicks your campaign has in a given period by the total number of impressions.
In other words, if your ad has been viewed 500 times (some impressions) and clicked 100 times, your CTR is 20%.
It is good to follow your CTR throughout the life of the campaign. You can generate reports by week, by month, or any time that suits you or your client.
There are different ways to determine what is an acceptable CTR. This could be by comparing to industry standards, for example.
- Analyze Google Ads data and can provide you with the information you need on a good target CTR, with data updated to 2018.
For example, the average CTR for research in the travel and hospitality industry is 4.68% and that of e-commerce is 2.69%.
- At least, this can be a reference for your business. However, tracking the CTR will also help you analyze individual campaigns to determine increases or decreases.
Cost Per Click (CPC)
It’s good to keep track of your CPC or the amount you pay for each click on an ad. This allows you to monitor your budget, but also the effectiveness of the campaign based on cost.To calculate CPC, you divide the total cost of your campaign by the number of clicks on an ad.Check your calculations and determine the total cost of the campaign by multiplying the CPC by the number of clicks your ads have.
CPC data will measure exactly how much you paid for a campaign. This is useful because although you have set a budget and bid price when setting up your paid search campaign, this does not mean that you are actually paying. The actual costs may be different from the offers.The cost of an ad may be determined by other competitors during a PPC auction. CPC helps you track your actual expenses.As your CPC increases, your ad spend also increases, so your return on investment decreases. In an ideal situation, during a campaign, your CPC should decrease and your return on investment should therefore increase.
It’s great to know how many people see your ad, click on it, and what the cost is, but it does not mean much if they do not achieve the desired action once on your website.
This is what makes the conversion rate so important.
Whether your “conversion” is a real sale, you provide the email address of a newsletter, or you fill out another form, the conversion rate will tell you if you are achieving that goal.
To calculate this measure, divide the number of people who “convert” or perform the desired action by the number of people who clicked on the ad.
If your conversion rate is not what you want, you may need to visit your website to make adjustments.
For example, analyze your user experience to make sure your landing page:
- performs on a variety of devices;
- It has a good loading speed;
- Is mobile friendly;
And, the desired action is clear to the users (the submission of the form is clear and simple, for example).
Make improvements if necessary and keep checking your conversion rate.
If your conversion rate increases, you will spend less on advertising to get a sale or other desired action. As a result, your return on investment will increase. So you always aim for an increase in your conversion rate.
This could also be called the opposite of your conversion rate.
Your bounce rate is the number of visitors who click on your site and leave without completing the desired action.
A high bounce rate will return you to your landing page to look for other improvements. Review again to make sure it is user-friendly and that the call-to-action is clear to direct users to the desired conversion.
You will always aim for a decrease in the bounce rate.
Return on Advertising Spend (ROAS)
It can be argued that this is the most important KPI, particularly in terms of determining your ROI.After all, what is more important than looking at the revenue earned vs. the money spent? To determine an effective ROAS, a break-even measure is a dollar earned for each dollar spent.
To calculate ROAS, divide the revenue of the campaign by the cost. If you made $500 and spent $100, your ROAS is $5. In other words, for every dollar you spent, you earned $5.You should note that sometimes a bounce rate can be artificially inflated.
For example, a user lands on your page, and then calls your business, then leaves. This would still count as a bounce, but in fact, the user actually converted.
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