PPC Analysis: Metrics to Track & Understand

22nd Jun 2022

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You might be starting out in PPC or have already run your first advertising campaign. But there are a whole lot of metrics to keep track of. Not only that, but you also need to understand the data at hand.

That’s one of the clearest ways of continuously improving your PPC campaigns.

  1. Gather data
  2. Analyse
  3. Understand the results
  4. Implement changes
  5. Reap the rewards

So, which metrics should you focus on? What do they mean? And how to improve your PPC analysis? Follow along while we explain all the above!

What is PPC?

Let’s start with the basics.PPC, otherwise known as ‘pay per click’, is an advertising model that’s mainly used by social media platforms or search engines. Think Google or Facebook.

The targeting options available usually range from location, interests, online behaviour, etc. In other words – almost everything you can dream of as an advertiser.

Although, the pricing can highly vary, depending on whom you advertise with. Especially with Google, which is the ‘final boss’ of the digital advertising platforms. Their Google Ads algorithm makes sure your ads are placed where you want them to be placed.

And the amount of money you pay really depends on the choices you make. If a lot of businesses want to advertise under a set keyword – the price to show your advert there will be higher. But there are ways to get around that, like thinking of clever ways to target your audience or even increasing your quality score.

To put it frankly, by using PPC in your marketing you’re showing up directly in front of your ideal target audience’s eyes and, if done correctly, it guarantees a good return on investment (Google pay-per-click ads have the biggest ROI of 200%).

Metrics to track for your PPC analysis

There is a lot of data to keep track of when managing a PPC campaign – it can appear quite scary if you don’t know what to look for.

We’ll explain the most relevant metrics you should keep track of a.k.a. the ones that are actionable for your PPC analysis. Comparing them over time can provide unique insights into your performance and will give you a clear overview of your goal progression.

So, here are some of the metrics we think are the most important to know.

Conversion Rate

In simple terms, conversion rate translates what’s the percentage of users who clicked on your advert and completed a predefined action.

These actions can vary highly, depending on what is your PPC campaign’s purpose. If it’s to get people to purchase – then the conversion will be a completed sale. While if it’s to get people to sign up for an email newsletter – it will be a completed sign-up form.

Also, investing in conversion rate optimisation might be worthwhile for better results from your website. And Google Analytics is a great tool to make sure you’re tracking all your conversions. Make sure it works with your website.

Moreover, the conversion rate is especially useful in determining how well your landing page is doing. If the conversion rate is low – that means people are clicking on the advert, but not completing the desired action. In other words, adjustments are probably needed to be made to the web page.

Cost Per Acquisition/Conversion (CPA)

The average amount of money it requires to gain a conversion is defined as the cost per acquisition (CPA).

Let’s say 5 conversions are made after every 25 clicks on your advert and one-click costs you £1. So, your cost per acquisition will be £5. You would calculate it by dividing the ‘total cost for clicks’ by the ‘number of conversions’. So, in this case, you would divide 25 by 5.

You’re most likely to see this metric once focusing on getting sales through PPC advertising. As it clearly transcribes how much money it takes to get one sale on average. Of course, it can also be used to track mobile app downloads, signups, etc.

But if you’re directly selling things through the adverts make sure to keep on top of CPA. As it directly refers to your profit. If you earn less per conversion than it costs you to gain it – you’re losing money.

Although, worrying about CPA might not be worth it if your business expects this and is doing it on purpose (i.e., conversions for your business take a lot of time, the products/services are expensive, or the sales are in huge volumes, etc.). Think about it this way, if your CPA is £1000 but each acquisition results in £20,000 it’s still more than worth it.

Click-Through Rate (CTR)

The click-through rate (CTR) is defined as the percentage of customers who clicked on your advert after seeing it. So, if 1000 people saw your ad and 100 clicked on it – you’ll have a CTR of 10%.

CTR is the most beneficial while determining how relevant the ad is to the people to whom it’s being shown. If your CTR is low that means people whom you’re targeting are not resonating with the advert. Whether it’s the imagery, copy, or targeting – something needs changing.

Additionally, understanding search intent, especially while using Google Ads, can mean the difference between a successful or a failed campaign. It can even make your budget last longer.

Even though CTR gives a good outline of an ad’s performance – ads still need to convert. That’s why comparing CTR to the conversion rate is highly recommended to gain the full picture of your campaign’s performance.

Cost Per Click (CPC)

Cost per click translates into how much it costs you, each time a person clicks on your advert.

CPC is usually a good way to show the bottom line of your advert cost. As it does not consider any actions from before or after, nor does it care about your landing page. It just simply states how much it costs to get 1 person to click.

And it’s a good way to track your budget spend. Especially if you’re using automated bidding – you want to make sure that CPC doesn’t skyrocket.

Keep in mind, that keywords with high search volume will have higher CPC than keywords with lower search volume. That’s why keyword research is so important for Google Ads.

A close alternative to CPC is ‘cost per thousand’ (CPM). It charges advertisers per 1000 impressions on your advert. It’s better suited for situations where you’re advertising to raise awareness, rather than gain conversions.

Return on Ad Spend (ROAS)

Return on ad spend is THE metric to describe how profitable your campaign is. It simply calculates how much money you’ve spent against how much money you’ve earned (directly from the ads).

So, if your campaign has earned £20 for every £5 spent on advertising – your ROAS will be 4:1 or 400%.

Analysing this metric presents you with a perfect opportunity to find out how your advertising efforts are performing profit-wise. It will also help you figure out which PPC methods are the most successful & help you see what optimisation works the best.

Bounce Rate

The bounce rate represents the percentage of people who went to your landing page and then left without taking any action.

The causes for a high bounce rate can vary. It may be that your ad does not represent what’s on your landing page accurately or that your landing page is irrelevant/hard to navigate.

Although don’t be too scared if you see a significant bounce rate – anything between 26% to 40% range is considered optimal. But if you’re seeing anything over 40%, it’s a good time to start looking into making changes.

And if it’s over 70% you can start worrying. At that point, the best course of action would be to pause the campaign in its entirety until you find solutions.

Final Thoughts

Understanding how PPC targeting works is one of the most important things in digital advertising. But it’s just one side of the coin.

Without knowing how to analyse the data you gain from advertising – you’re missing out on profitability and all the magic PPC analysis can bring with it. Understanding the metrics at hand will allow you to further optimise your campaigns, reducing costs and improving returns.

If you’re still unsure how to start with PPC, feel free to check out our 5 tips to optimise your Google Ads campaigns. Or alternatively, have you thought of intertwining your search advertising with SEO? Our guide on the four pillars of SEO is a great place to begin learning.

Although, if you’ve determined that this is too much of a learning curve – there’s always an option of hiring a Google-partnered agency, like think3, to bring guaranteed results for you!