When analyzing data on AdWords, it’s easy to become overwhelmed. There are dozens of reporting features and countless metrics to asses.
From impressions to clicks to CTR and conversions, which should you be focusing on for campaign success?
Which metrics really matter and which are just a waste of time?
Focusing on the wrong metrics, like vanity metrics, can cause you to make poor business decisions that don’t impact your bottom line.
Focusing on the right metrics will secure profit for your business for years to come.
In this section, you will learn what the most important PPC metrics are
on AdWords and how to use the reporting features to track them.
Acquisition and Lifetime Value: Two Metrics You Need to TrackWhen running campaigns on AdWords, your dashboard will provide some great metrics on performance.
Things like click-through rate. Impressions. Phone calls.
And while it might be amazing to see those numbers go up, it’s deceiving.
Most metrics on AdWords are vanity metrics. That means they look great on the surface but provide no real value to your strategy.
It’s cool to see 1,000,000 impressions, right? But that doesn’t mean anything if you aren’t running a campaign built on brand awareness.
Having a million impressions is worthless if you aren’t converting them.
Clicks are worthless if you aren’t converting them.
CTR doesn’t even matter if you aren’t converting them.
In many cases, conversions don’t really mean conversions, too.
If you aren’t selling direct products with an online store, your conversions are, basically, just leads. They are consultations, interested searchers
who want to learn more and gave you contact information.
When it comes to metrics, there are only two you need to focus on:
Cost per acquisition/cost per conversion and lifetime value
What is AdWords Cost per Acquisition?
Cost per acquisition or conversion is simply the amount of money you had to spend to acquire that customer.
For instance, if it took you 15 clicks at $1.00 per click, that’s a $15 cost to acquire them.
This metric tells you if you are profitable or not.
If your customers only paid you $10 for your product, but you spent $15 to acquire them, you aren’t profiting.
If they spent $50 on your site, you’d be profiting on a $15 acquisition.
What is AdWords Lifetime Value?
Lifetime value is the total amount that a customer spends with you over their relationship with your business.
After acquiring a customer or getting them to buy from you, how much do they spend? How many times do they come back and purchase again?
If a customer buys from you twice a year on average and each order is $100, that’s a $200 yearly lifetime value.
So, why on earth is this metric that important?
It dictates what you can afford to spend on acquiring new customers.
On the surface, $50 might seem like a ton of money to get one customer. But if they spend $200 a year, that’s a significant profit. Even if their first purchase is only $50, you can expect them to spend 4x that amount in the coming year, making $50 acquisition costs harmless in the grand scheme.
In your AdWords reports, track cost per conversion to get a rough idea of acquisition costs:
If lifetime value is low, you can’t spend much on acquisition.
If it’s high, you can.
Key Reports To Measuring Success on AdWordsAdWords packs some amazing reports that can help you monitor, analyze and improve your PPC performance.
With the new AdWords interface updates, reports have changed, been eliminated, and updated which make them hard to find.
One of the best reports of the old AdWords interface was called “Top Movers.” This report essentially identified segments of your account that shifted the most in a given time frame.
Including metrics like impressions, costs, conversions, and CTR, you could identify good and bad changes that made big impacts on performance, helping you sift through the noise of AdWords and focus on big-ticket items.
Thankfully, this report still exists in AdWords, just under a different name:
The Biggest Changes report
The Biggest Changes report can be found in your dashboard overview section:
In this report, you’ll be able to analyze data sorted by metrics like cost, conversions, CPC, CTR and more:
Here’s the list of the reporting metrics to pick from:
This report is terrific for finding big winners and putting the breaks on campaigns that are tanking.
Sort your data by conversions to get a glimpse of any campaigns that are winning big. If they are, double down by allocating more of your budget toward that campaign.
If campaigns are in the negative compared to the prior seven days, consider pausing them or reducing your budget in favor of other campaigns.
The Biggest Changes report should be the first report you check, daily or weekly, on AdWords.
Instead of running through your entire account trying to figure out what’s happening, use the Biggest Changes report to get the big picture. Then you can dive deep into each campaign.
Another fantastic report in AdWords can be found at the campaign, ad group and keyword levels depending on where you want to focus your efforts, and it’s called:
The Auction Insights report
To access it, click on campaigns, ad groups, or keywords and then “Auction Insights.”
From here, you will see a detailed table displaying your performance in comparison to your competition:
In the table, you can compare ad positions and metrics like “Position above rate” which shows how often your competition outranks you.
These metrics are great for knowing when you need to increase bids or quality scores and attempt to overtake your competitors in rankings.
“Outranking share,” tells you how often your ad was shown higher than their ad. If it’s low, you likely aren’t bidding enough or have worse quality scores than your competition.
Utilize this report every week to see fluctuations and if your efforts to increase bids or improve ad relevance are working.
The metrics in the Auction Insights report give you a strong picture of how well you are doing in comparison to the competition.
Lastly, the final report you should always be using showcases all of your keywords and key metrics on their performance, allowing you to make budget and bidding decisions on your campaigns.
Yes, we’re talking of:
The Keyword report
To access the Keyword report, head to your dashboard and click on the reporting tool.
Navigate to “Predefined reports” and then click “Basic.”
Next, select “Keyword” from the drop-down menu:
Here you can analyze each keyword you currently bid on with your existing campaigns and ad groups:
Look at key metrics like conversions, cost per conversion, and conversion rates first.
Are specific keywords converting better than others? Are keywords converting well but too expensive? Reduce their budget and put your budget into keywords that are converting cheap but don’t have as many total conversions.
The Keyword report is an excellent tool to help you decide where your bid and budget adjustments need to be to improve performance.
Speaking of performance…
Be sure to check out the next chapter to keep your
AdWords account performing well for years to come.
PS: You’re almost done… c’mon! 💪