PPC Campaign Tracking Essentials

CTR, CPC, Conversion Rates. What you should be tracking on your PPC campaigns yet hardly anyone does.

Do you know how well your campaign is performing? Are you making money? How many visitors are visiting your site? How many visitors do you convert to sales leads/sales each month? What pages on the site are they visiting? What’s the Cost per Conversion? What’s the campaign ROI? What are good CTRs, Conversion Rates, etc?

Are you making money?

If you don’t know or don’t know why you should care, your not alone most clients I speak with have never tracked conversions or doesn’t know what their ROI. PPC is the most powerful advertising mode available to a marketer today however, with increasing competition and entry of bigger players in the fray , it has become extremely important for the campaigns to be managed well. Avoid peril, measure, monitor and memorize the following aspects of your PPC campaign, they will enable you to discover problem areas and which steps need to be taken to fix them. Most importantly they will indicate whether or not your campaigns are profitable.


Campaign ROI

For those that don’t know Return on Investment or ROI, it is a measurement that tells how effectively a business uses its capital to generate profit; the higher the ROI, the better. In order to determine ROI you must first know your profit:

sales - ad spend - expenses = profit

The formula for ROI is also very easy:

profit/ad spend = roi

Tracking ROI with a spreadsheet is the best way to get started if you have the time to dedicate to it. There are also services & software that track your conversion rate and your ROI for you automatically. Using software is the most accurate and best way to track ROI and to determine which campaigns, ad groups and keywords generate the most revenue and have the highest ROI. However, when starting it can be tough, here is a free online pay per click ROI calculator.

Be aware that highest ROI does not always mean biggest profit/return.
Here is a good example. If your making 10% profit on sales of $1,000 is better than 50% profit on sales of $10 even though the ROI of the latter is higher. What this means for you is that you have to know the relative different ROIs of your keywords in their different positions and then select the optimum combination to stay inside your budget constraints.

Conversion Rate

The term ‘conversion’ refers to converting visitors to your site into sales, sales leads or any event that you choose. So if someone clicks on one of your PPC ads, and purchases something from your site, that click is a conversion from a visit to a sale. Remember, advertising is only effective if it generates measurable results. Your Google AdWords account is an investment of time and money that you use to drive customers to your website.

The conversion rate is the percentage of visitors who take a desired action. As stated before the desired action can be a sales lead, a sale, viewing a key page of the site, downloading a brochure, or any other measurable action.

To calculate your conversion rate divide the number of conversions by the number of ad clicks.

For companies that seek to generate offline responses like telephone calls, measuring conversions could be difficult until recently. A company called VoiceStar enables you to monitor every call sourced by your site in real time and no additional hardware or software is required.


Cost per Conversion

Cost per conversion is the cost of acquiring a conversion. To calculate cost per conversion divide the total cost by the total number of conversions. Then set your campaign goals to hit the desired cost per conversion.


Quality Score

Quality Score pretty much only applies to Google Adwords, for now. A Quality Score is assigned to each of your keywords and many believe your ads as well. It’s calculated using a variety of factors and measures how relevant your keyword is to your ad group and to a user’s search query.

Quality Score dictates your ads’ position in the results on Google and their network. It also determines your keywords minimum bid. In general, the higher your Quality Score, the better your ad position and the less you pay. There are many factors that determine your quality score some of which Google does not publicize. Here are a couple:

  • The keyword’s click through rate (CTR) on Google; CTR on the Google Network is not considered
  • Your ads click through rate (CTR)
  • The quality and relevance of your landing page (in other words if the keyword “cheap faucets” does not have the phrase on the landing page you will not have a high quality score)
  • And as Google puts it “Other relevance factors”

I can not stress enough the importance of quality score. It is also in your benefit to have a high quality score because this is indicative of highly targeted traffic. Meaning you are getting only the people or businesses interested in your product/service at the time they are ready to make a purchasing decision. In the future I will write extensively on the subject of quality score. For now please read this short definition that Google has provided called What is a ‘Quality Score’ and how is it calculated?”

Click Through Rate (CTR)

Click-through rate or CTR is a way of measuring the success of an online advertising campaign as well as a method for detecting small problems before they become large problems. Your ads and keywords each have their own CTRs, and an overall CTR.

If you notice your CTR drop suddenly and expectingly check your average position. If it has dropped as well, your competitive landscape may have change and this is a warning sign that your campaign should change accordingly.

Also remember CTR affects your quality score. Send me your comments and I can give you tips to improve your CTR, and I will also post future articles on how to improve CTR.

Cost per Click (CPC)

Cost per Click or CPC is amount you pay per click on one of your PPC ads. Most advertising networks allow you to set maximum and minimum CPC while some second tier networks do not. It is important to know your average CPC so that through time you can trend and make budgetary decisions for the future.

Just like every business is unique so are PPC campaigns. It may be important to Company A to track incoming phone calls to see which advertising network is producing the best results, where Company B does no phone sales. The important lesson here is in order to truly tap all of the revenue stream through PPC it is important that all efforts can be measured before you can have well managed campaigns.

The preceding measurement allow you to utilize the Internet Marketing Method: Experiment. Evaluate. Adjust.