Understanding Your Google Ads Metrics With the Latest Interface

How do you know what the metrics in Google Ads mean and which ones matter the most? The latest version of Google Ads’ interface has a particularly large number of metrics, so it’s easy to get overwhelmed when you first log on.

How do you know what the metrics in Google Ads mean and which ones matter the most? The latest version of Google Ads’ interface has a particularly large number of metrics, so it’s easy to get overwhelmed when you first log on.

Each page has a table full of data, including a graph of metrics and various reports. It’s a little like looking at an airplane cockpit for the first time, with all its lights, switches and gauges. However, experienced advertisers know that all the information in Google Ads allows you to dig into your campaign performance and find ways to improve it.

Which Metrics Really Matter?

The most important Google Ads metrics include the following:

  • Cost-per-click (CPC)
  • Clickthrough rate (CTR)
  • Conversion rate
  • Cost-per-acquisition (CPA)

CPC

CPC is an advertising model in which an advertiser pays a website owner each time a user clicks on an ad. First-tier search engines like Google Ads typically use a CPC model, because advertisers can bid on key phrases that are relevant to their target market. In comparison, content sites typically charge per 1,000 impressions of the ad.

CTR

CTR, or clickthrough rate, is the ratio of users who click a link to the total number of users who view the ad. CTR generally indicates a marketing campaign’s effectiveness in attracting visitors to a website.

Conversion Rate

Conversion rate is the ratio of goal achievements to the number of visitors. It’s essentially the proportion of visitors who take a desired action as a result of your marketing activity. The specific action that a conversion rate monitors depends on the type of business you’re promoting. For example, online retailers often define a conversion as a sale, while services businesses consider other actions, such as a request for a quote, a demo sign up or a report download, when measuring conversion rate.

CPA

CPA, or cost per action, is the total cost of your ads divided by the number of conversions. Again, the specific action depends on the type of business you’re promoting. For example, CPA for online retailers is typically the cost per e-commerce sale. Services businesses typically measure CPA as a cost per lead. This number is critical, because it tells you if your campaigns are profitable or not.

How Can Metrics Help You Improve Performance?

Poor metrics can indicate courses of action that can help you improve your Google Ads campaign performance.

CPC

A high CPC could mean that you need to raise the quality scores for your ad, which could reduce the cost of each click. You can also accomplish this by using ad scheduling and geotargeting to ensure your website doesn’t show ads during times or in locations where you don’t do business. Additional strategies for reducing CPC include using demographic targeting, in-market audiences and remarketing to narrow your audience to just the people who are interested in your business.

CTR

A low CTR can indicate that you need to review the keywords and ad copy in your Google Ads account. For example, you should ensure that you’re only bidding on keywords that relate to your offers. You should also perform A/B testing on your ads to determine the factors that interest your prospects the most, whether it’s features, benefits or some emotional trigger. You can also improve CTR by ensuring that your ad takes up as much room as possible by implementing ad extensions.

Conversion Rate

A low conversion rate can indicate that you need to take a closer look at your landing pages, where visitors go when they click on an ad. These pages should be very clean and quick to load to ensure visitors don’t lose interest after they click. Your ads should always send visitors directly to a dedicated landing page, rather than just your home page or even a general landing page.

CPA

A high CPA means that you aren’t getting a good return on investment (ROI) from your ad spend. Possible causes of a high CPA include a high CPC or low conversion rate, which often means a poor choice of keywords and ad copy. Concentrate your budget on high-converting keywords with a high intent to buy.

Conclusion

Google Ads provides many metrics that can tell you how to improve website performance. However, this information can also be daunting to interpret if you don’t know what it means.  Follow the tips above to monitor your key metrics and make adjustments to improve your Google Ads performance.

Want more tips to improve your Google advertising? Get your free copy of our “Ultimate Google AdWords Checklist.”

 

The Google Ads Budget Formula and a Metric to Help You Beat Your Competitors

Struggling to calculate your Google Ads budget? Learn a quick formula to use when you’re just getting started and also learn the most important metric to gain a competitive advantage.

Google Ads have helped many businesses thrive because of their power in generating leads and sales. The problem is that this power can be difficult to navigate, which has left some businesses on the sidelines wondering why they didn’t see results.

The topic of how much to spend is one that is tossed around among users and professionals, alike. The answer depends on how well you run your ad campaigns.

Budget for New Google Ads Campaigns

When you first use Google Ads, limit your budget. At this point, you do not know which keywords, ads or landing pages will be most effective, so you need to test different strategies. Because some of the money will be lost, you don’t want to waste too much.

The goal during this stage isn’t to make a huge profit. It’s to either make a small profit, break even or only lose some money. Your mindset should be that you’re investing in market research for a much more successful future with Google Ads.

Limiting your budget is a bit arbitrary. Simple math can give you a concrete amount for a budget.

Multiply the estimated cost per click of each keyword you want to test by a minimum of 100 to 200 clicks. This will ensure you’re giving each keyword a fair test. For instance, if you are testing 10 keywords with a cost per click of $1, you should consider having a budget of $1,000 to $2,000.

Growing Out of the Budget

You will know when you’re out of the testing phase when profits exceed your budget. This is the sign that tells you to abandon the budget.

Yes, you read that right — no budget.

It’s not about how much you spend on Google Ads — it’s about how much return on investment (ROI) you’re get from it.

Think about it for a minute. If you’re making $2, $3 or $4 off a $1 investment, why would you want to cap that? That’s success right there, and you might as well run with it.

Switching From CPC to EPC

Too many people focus on the cost per click of their keywords when they really should be paying attention to their earnings per click (EPC). If you have the highest earnings per click vs. your competitors, then you know you can outbid them to gain more clicks, more leads and more customers.

So, how do you calculate your EPC? All you have to do is multiply your conversion rate (the percentage of people who become paying customers) by your customer value (the amount of money you earn from that customer).

To understand this better, let’s say one customer generates $500 for you. If your conversion rate is 1%, then your earnings per click is $5. This is your golden number. Keywords with a CPC less than $5 will be profitable if your conversion rate remains 1%.

With this in mind, it’s important to note that increasing your EPC is the best way to compete in Google Ads.

The cost per click for your target keywords is not likely going to go down … In fact, there’s a good chance you’ll need to pay more per click in the coming months and years. That means your EPC is your biggest competitive advantage.

Conclusion

You know that spending a lot of money on Google Ads isn’t what produces results. Ad campaigns need to be run effectively and a budget needs to be used in a way that helps identify what works best in your market. Once that information reveals itself, removing the budget (if possible) and focusing on ROI is the best decision, moving forward.

And remember, the business with the highest EPC has the advantage in Google Ads.

Want more tips to improve your Google Ads campaigns?  Click here to grab a copy of our “Ultimate Google Ads Checklist.”