Key performance indicators, or KPIs, are measurable values that are used to track the performance of a business or organisation. These indicators are chosen based on the specific goals and objectives of the organisation, and they provide a way to measure progress towards those goals. In the world of pay-per-click (PPC) advertising, KPIs are particularly important for tracking the success of campaigns and determining the return on investment (ROI) of ad spend.
Types of PPC KPIs
There are many different KPIs that can be used to measure the performance of a PPC campaign, and the specific KPIs chosen will depend on the goals of the campaign and the industry in which the business operates. Some common PPC KPIs include:
- Cost per click (CPC): This KPI measures the average cost of a single click on an advertisement. A lower CPC indicates that the ad is more effective at driving traffic to the website, while a higher CPC may indicate that the ad is less effective or that the competition for clicks is high.
- Click-through rate (CTR): This KPI measures the percentage of people who click on an advertisement after seeing it. A high CTR indicates that the ad is engaging and relevant to the target audience, while a low CTR may indicate that the ad is not resonating with the audience or that the ad is not being placed in an effective location.
- Conversion rate: This KPI measures the percentage of people who take a desired action (such as making a purchase or filling out a form) after clicking on an advertisement. A high conversion rate indicates that the ad is effectively driving sales or leads, while a low conversion rate may indicate that the ad is not targeted to the right audience or that the website is not optimised for conversions.
- Return on ad spend (ROAS): This KPI measures the profitability of a PPC campaign by dividing the revenue generated by the ad spend. A high ROAS indicates that the campaign is generating a good return on investment, while a low ROAS may indicate that the campaign is not performing as well as expected.
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Importance of PPC KPIs
Tracking PPC KPIs is important for a number of reasons. Firstly, it allows advertisers to measure the effectiveness of their campaigns and make data-driven decisions about how to optimise them. By understanding which KPIs are performing well and which ones are not, advertisers can identify areas for improvement and make changes to their campaigns to drive better results.
In addition, tracking PPC KPIs allows advertisers to set and track progress towards specific goals. For example, an advertiser may set a goal to reduce the cost per acquisition (CPA) of their campaigns and track their progress towards this goal over time. By setting and tracking specific goals, advertisers can ensure that their campaigns are aligned with their overall business objectives and that they are making progress towards achieving those objectives.
Finally, tracking PPC KPIs allows advertisers to identify trends and patterns in their campaigns and make data-driven decisions about how to allocate their ad budget. By understanding which campaigns are performing well and which ones are not, advertisers can allocate their budget in a way that maximises their return on investment.
Best Practices for Tracking PPC KPIs
There are a few best practices that advertisers should follow when tracking PPC KPIs to ensure that they are getting the most accurate and useful data possible:
- Choose the right KPIs: It is important to choose the right KPIs to track based on the specific goals of the campaign. Different KPIs will be more relevant for different industries and campaign goals, so it is important to carefully consider which KPIs will be most useful for tracking the performance of a particular campaign.
- Track multiple KPIs: It is generally a good idea to track multiple KPIs in order to get a more complete picture of the performance of a campaign. By tracking a variety of KPIs, advertisers can identify trends and patterns in their data and get a better understanding of the factors that are driving their results.
- Use tracking tools: There are many tools and software programs available that can help advertisers track and analyse their PPC KPIs. These tools can provide a wealth of data and insights about the performance of a campaign, and can be especially helpful for tracking multiple KPIs and identifying trends over time.
- Set benchmarks and targets: Setting benchmarks and targets for PPC KPIs can help advertisers track their progress and identify areas for improvement. By setting specific targets for each KPI, advertisers can ensure that they are making progress towards their goals and can adjust their campaigns as needed to drive better results.
- Regularly review and analyse data: Regularly reviewing and analysing PPC KPI data is essential for identifying trends and patterns and making data-driven decisions about how to optimise campaigns. By regularly reviewing and analyzing their data, advertisers can stay up to date on the performance of their campaigns and make timely changes to drive better results.
Table of Common PPC KPIs and Their Definitions
|Cost per click (CPC)||The average cost of a single click on an advertisement.|
|Click-through rate (CTR)||The percentage of people who click on an advertisement after seeing it.|
|Conversion rate||The percentage of people who take a desired action (such as making a purchase or filling out a form) after clicking on an advertisement.|
|Return on ad spend (ROAS)||The profitability of a PPC campaign, calculated by dividing the revenue generated by the ad spend.|
|Cost per acquisition (CPA)||The cost of acquiring a customer or generating a lead, calculated by dividing the ad spend by the number of conversions.|
|Impression share||The percentage of times that an advertisement could have been shown (based on its bid and targeting settings) compared to the total number of impressions it received.|
What is a good conversion rate for a PPC campaign?
The ideal conversion rate for a PPC campaign will depend on the specific goals and objectives of the campaign and the industry in which the business operates. In general, a conversion rate of 2-3% is considered good for most PPC campaigns, although higher or lower conversion rates may be more realistic depending on the industry and the specific goals of the campaign.
How can I improve my PPC campaign’s conversion rate?
There are several steps that advertisers can take to improve the conversion rate of their PPC campaigns, including:
- Ensuring that the ad copy and targeting are relevant to the target audience
- Optimising the landing page for conversions
- Testing different ad variations to see which ones perform best
- Segmenting the audience and targeting specific groups with tailored ads
- Utilising retargeting to reach users who have previously interacted with the business
Is it better to have a high or low cost per click (CPC)?
In general, a low CPC is generally considered better for PPC campaigns, as it indicates that the ad is performing well and that the competition for clicks is not too high. However, it is important to consider the overall performance of the campaign when evaluating the CPC. For example, a high CPC may be acceptable if the conversion rate is also high and the campaign is generating a good return on investment (ROI).
Can I track PPC KPIs with Google Analytics?
Yes, it is possible to track PPC KPIs with Google Analytics. Google Analytics provides a wealth of data and insights about the performance of PPC campaigns, including metrics such as cost per click, click-through rate, and conversion rate. Advertisers can use the data provided by Google Analytics to track the performance of their campaigns and make data-driven decisions about how to optimize them.