Tactical KPIs That Reveal True Paid Search Performance

@Amy | Search

Once you find yourself responsible for managing an Adwords account, the next step is to learn how to measure its successes. There can be an overwhelming amount of reporting and ways to manipulate your data, however, it all comes down to a handful of metrics, which truly reveal your paid search outcomes.

Here are some KPIs (Key Performance Indicators) to pay close attention to and treat as a top priority.  Don’t narrow your analysis down to only these, but be sure to become familiar with as many metrics as possible in order to have a full understanding of all the working parts of your account.

CTR (Click-Through-Rate)

CTR is the percentage that reveals how many users see your ad and click on it.  The calculation for this KPI is:  Clicks÷Impressions.  CTR is one of the highest ranked metrics because it’s a key influencer to your keyword Quality Scores and also helps determine the relevancy of your ad’s messaging.

When seeing a low CTR, typically under 1% on the Search Network, it’s time to edit your ads, A/B test against a new ad, or pause an under-performing ad.  We recommend at least 2-3 ads running per ad group to help determine these steps noted above.

CVR (Conversion Rate)

CVR is also another highly ranked metric in paid search and can be calculated by dividing the number of conversions by the number of clicks.  It accounts for the percentage of users who click on your ads and complete a given action, which could be a sale of purchase, whitepaper sign-up, free trial, etc., from your desired landing page. In order to help boost your Conversion Rate, test a variety of landing page layouts to reveal which page earns you the best results. The higher the CVR, the greater the profits will be in your pocket.

CPA (Cost Per Acquisition)

The Cost Per Acquisition (Cost÷Conversions) is always a key metric to keep on your radar. This not only tells you how much you’re paying for a customer sign-up and/or purchase, but also helps regulate your spend.  You want to ensure you’re managing the account in the most cost effective way.  Take advantage of those low CPA keywords in your account and know when to ditch the costly terms in order to reach and maintain a positive return on your investment.

Quality Score

Quality Score is what Google uses to measure the relevancy of your keywords; ensuring users have a positive experience in finding what they’re looking for.  This is calculated every time a user conducts a search, which then triggers your ad. This scale is based on 1-10, 10 being the highest, and can be potentially updated multiple times a day. The factors that significantly influence your Quality Scores are the following:

  • Click through rate
  • Cost settings (CPC bids)
  • Landing page quality
  • The keyword & ad relevancy
  • The keyword relevancy based on user searches
  • Keyword groupings within ad groups

In order to maintain high quality scores, it’s very important to continuously optimize and check on the above factors. Google will reward you with lowered CPCs (cost per click) and better ad positioning amongst your competition. If you fail to do so and struggle with low QSs, you’ll be left with higher costs, low ad positioning and it’s very possible your ads will not be displayed at all.

The Closer

Be sure to utilize all these levers on both a daily and weekly basis when optimizing and improving your account performance. There is a great deal of consumer potential for all products and services utilizing Google Adwords. Just be sure to look beyond the keywords you bid on, the ads you create and the landing pages you choose. There’s a story behind them allowing you to reach a larger audience and become extremely profitable.

Additions & Feedback

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