Top 50 Digital Marketing Metrics Part 3: PPC Metrics
Continuing with our comprehensive digital marketing metrics blog series with part 3: Paid Advertising & Conversion Metrics. If you are new to the series, you can visit our previous blogs: Website Traffic Metrics and Search Engine Optimization Metrics.
Paid advertising (PPC) has become increasingly popular in recent years and for good reason. According to Statista, digital advertising spending worldwide amounted to USD 522.5 billion in 2021, and it would reach USD 836 billion by 2026. Also, studies indicate that PPC (pay-per-click) advertisements could return $2 for every $1 spent.
Paid advertising (PPC) involves paying to display your ads on various platforms, such as social media, search engines (SEM), and websites. This can include pay-per-click (PPC) ads, display ads, sponsored content, social ads, etc.
One of the biggest advantages of paid advertising is that it allows you to reach a highly targeted audience. With the right targeting options, you can ensure that your ads are shown to people who are most likely to be interested in your products or services.
In addition to targeting options, paid advertising also offers a range of customization and optimization options. For example, you can create multiple ad variations and test them to see which performs best.
Of course, like any marketing strategy, paid advertising does come with its challenges. It can be difficult to navigate the various ad platforms and targeting options, and it can take time and money to see real results.
Also, sometimes it becomes difficult to spend money without getting any tangible results for your advertising campaign. That’s where PPC metrics come into the picture. Understanding the right paid advertising metrics to track is essential to run a successful ad campaign.
In this article, we’ll explore the key paid advertising (PPC) metrics you should be tracking, and how to use them to optimize your campaigns for maximum effectiveness.
We will also explore some lesser-known metrics that can have a significant impact on your advertising performance, such as ad frequency and attribution modeling.
By understanding these PPC metrics and how they work together, you can gain a more comprehensive view of your advertising efforts and make informed decisions about how to allocate your budget.
Whether you’re a seasoned advertiser or just getting started, this blog will help you track the right metrics to get the most out of your advertising spend. So, let’s dive in for digital marketing success!
Click-through rate (CTR) is also an essential metric in the context of conversion and paid advertising.
In this context, CTR measures the number of clicks on a paid advertisement divided by the number of times the ad was displayed. For example, if a paid ad is displayed 100 times and receives 10 clicks, the CTR would be 10%.
A high CTR in paid advertising indicates that the ad is effectively attracting clicks and generating traffic to the advertiser’s website, resulting in higher chances of conversions.
On the other hand, a low CTR may indicate that the ad needs improvement in terms of its design, message, targeting, or relevance to the audience.
The average CTR for Google Ads across all industries is around 3.17% for search ads and 0.46% for display ads. However, the CTR can vary widely depending on various factors such as ad placement, targeting, and competition.
To improve CTR in paid advertising, advertisers can focus on improving ad relevance, targeting the right audience, using compelling ad copy, and testing different ad formats and designs to find what works best.
Cost per click (CPC) measures the cost an advertiser pays for each click on their ad. It is calculated by dividing the total cost of a paid advertising campaign by the total number of clicks the campaign generated.
For example, an advertiser runs a Google Ads campaign and spends $500 on it. During the campaign, the ad received 1,000 clicks. The CPC for this campaign would be $0.50, calculated by dividing $500 by 1,000 clicks.
CPC is an important metric for advertisers because it helps them understand how much they are paying for each click on their ad. It also helps them optimize their campaigns by identifying which keywords or ads are generating the most clicks at the lowest cost.
CPC can vary widely depending on the platform and industry. For example, the average CPC for a Google Ads campaign in the legal industry is $6.75, while the average CPC for the automotive industry is $2.46. This is because certain industries have more competition and higher advertising costs.
A low CPC indicates that an advertiser can generate more clicks on their ad for a lower cost leading to a higher ROI. On the other hand, a high CPC may indicate that an advertiser is struggling to generate clicks on their ad, which can lead to a lower ROI.
For example, a fashion retailer may have a low CPC on their paid advertising campaign for sale promotion, as the ad is highly relevant to potential customers and generates a high number of clicks. On the other hand, a luxury brand may have a higher CPC as its ads are targeted to a niche audience with higher competition for clicks.
Conversion rate is a key metric used in digital marketing to measure the effectiveness of a marketing campaign in driving conversions.
It is the percentage of visitors to a website or landing page who take a desired action, such as making a purchase or filling out a form.
For example, if a website receives 1,000 visitors in a month and 100 of those visitors make a purchase, the conversion rate is 10% (100/1,000).
Conversion rate is an important metric because it helps businesses understand how well their marketing efforts are performing in terms of generating leads and sales.
A higher conversion rate indicates that more visitors are taking the desired action, which can ultimately lead to increased revenue.
Conversion rates can vary widely depending on the industry, website, and type of conversion being measured. For instance, the average conversion rate for e-commerce websites is around 2.86%, while the average conversion rate for landing pages used in B2B lead generation is around 13.28%.
Improving conversion rate can be achieved by optimizing various elements of the marketing campaign, such as the landing page design, ad copy, targeting, and call-to-action.
A/B testing can also be used to test different variations of these elements to determine which one results in a higher conversion rate.
The abandoned cart rate measures the percentage of online shopping carts that are abandoned by customers before completing a purchase. It is calculated by dividing the number of completed purchases by the number of initiated purchases.
For example, if an online store had 1,000 initiated purchases, but only 200 of them were completed, the abandoned cart rate would be 80% (1,000-200/1,000).
Abandoned cart rate is an important metric for e-commerce businesses because it indicates how well their website and checkout process are optimized to convert visitors into paying customers.
A high abandoned cart rate can mean that there are barriers or issues with the checkout process, such as a complicated checkout form or unexpected shipping costs, that are preventing customers from completing their purchases.
According to Baymard Institute, the average cart abandonment rate for e-commerce websites is around 69%. However, this rate can vary significantly depending on the industry and website. For example, the abandoned cart rate for fashion and apparel websites is around 74%, while the rate for home and garden websites is around 62%.
Reducing abandoned cart rates can be achieved by implementing various strategies, such as simplifying the checkout process, offering free shipping, providing clear pricing information, and sending cart abandonment emails to remind customers about their abandoned items.
A/B testing can also be used to test different variations of these strategies to determine which ones are most effective in reducing the abandoned cart rate.
By continuously monitoring and optimizing abandoned cart rates, businesses can improve their online sales and revenue.
The lead generation rate measures the percentage of website visitors who provide their contact information or express interest in a product or service. It is calculated by dividing the number of leads generated by the total number of website visitors.
For example, if a website receives 1,000 visitors in a month and generates 100 leads, the lead generation rate would be 10% (100/1,000).
Lead generation rate is an important metric for businesses because it indicates how effective their website and marketing efforts are in generating potential customers.
A higher lead generation rate indicates that more website visitors are interested in the products or services being offered, which can ultimately lead to increased revenue.
Lead generation rate can vary significantly depending on the industry, website, and type of lead being measured.
Improving the lead generation rate can be achieved by optimizing various elements of the website, such as the design, content, call-to-action, and lead capture forms.
A/B testing can also be used to test different variations of these elements to determine which ones are most effective in generating leads.
Cost per acquisition (CPA) is a conversion metric that measures the average cost of acquiring a new customer. It is calculated by dividing the total cost of advertising campaigns by the number of new customers acquired.
For example, if a business spends $10,000 on advertising campaigns in a month and acquires 100 new customers, the CPA would be $100 ($10,000/100).
CPA is an important metric for businesses because it indicates the cost-effectiveness of their advertising campaigns in acquiring new customers.
A lower CPA indicates that the business is acquiring new customers at a lower cost, which can lead to increased profits.
The average CPA can vary widely depending on the industry, type of advertising campaign, type of product or service being advertised, and the competitiveness of the market.
To improve CPA, businesses can optimize their advertising campaigns by targeting the right audience, using relevant keywords and ad copy, and continuously monitoring and optimizing their ad spend.
In addition, businesses can also use different types of advertising campaigns such as retargeting campaigns, which target customers who have already shown interest in the business, and referral campaigns, which encourage current customers to refer their friends and family.
Return on ad spend (ROAS) measures the amount of revenue generated for every dollar spent on advertising. It is calculated by dividing the total revenue generated by the total cost of advertising campaigns.
For example, if a business spends $10,000 on advertising campaigns and generates $50,000 in revenue, the ROAS would be 5 ($50,000/$10,000).
ROAS is an important metric for businesses because it indicates the return on investment (ROI) of their advertising campaigns. A higher ROAS indicates that the business is generating more revenue for every dollar spent on advertising, which can lead to increased profits.
To improve ROAS, businesses can optimize their advertising campaigns by targeting the right audience, using relevant keywords and ad copy, and continuously monitoring and optimizing their ad spend.
In addition, businesses can also use different types of advertising campaigns, such as retargeting campaigns, which target customers who have already shown interest in the business, and referral campaigns, which encourage current customers to refer their friends and family.
Cost per conversion measures the average cost of each conversion. It is calculated by dividing the total cost of advertising campaigns by the number of conversions. Here, conversions can include a variety of actions, such as filling out a form, making a purchase, subscribing to a service, etc.
For example, if a business spends $10,000 on advertising campaigns in a month and generates 200 conversions, the cost per conversion would be $50 ($10,000/200).
Cost per conversion is an important metric for businesses because it indicates the cost of each successful conversion. By optimizing the cost per conversion, businesses can improve the cost-effectiveness of their advertising campaigns and generate more revenue.
The average cost per conversion can vary widely depending on the industry and type of advertising campaign.
According to recent studies, the average cost per conversion for Google Ads across all industries is around $48.96, while the average cost per conversion for Facebook Ads is around $18.68.
However, these rates can vary significantly depending on factors such as the type of product or service being advertised and the competitiveness of the market.
Businesses can optimize their advertising campaigns by targeting the right audience, using relevant keywords and ad copy, and continuously monitoring and optimizing their ad spending to improve cost per conversion.
In addition, businesses can also use different types of advertising campaigns, such as retargeting campaigns, which target customers who have already shown interest in the business & referral campaigns, which encourage current customers to refer their friends and family.
Conversion value measures the total value generated from each conversion, such as the revenue generated from a purchase or the estimated lifetime value of a new customer.
It is calculated by multiplying the total number of conversions by the average value of each conversion.
For example, if a business generates 100 conversions with an average value of $100, the conversion value would be $10,000 (100 x $100).
Conversion value is an important metric for businesses as it provides insights into the overall value of their advertising campaigns.
By understanding the conversion value, businesses can make informed decisions about their advertising strategies and allocate their resources to campaigns that generate the highest value.
The average conversion value can vary widely depending on the industry and type of advertising campaign. For example, an e-commerce business may have a higher conversion value compared to a service-based business.
However, businesses can increase their conversion value by focusing on high-value customers, increasing the value of each purchase or conversion, and optimizing their advertising campaigns for maximum return on investment.
Businesses can focus on improving customer retention and increasing the average order value to improve conversion value. This can be achieved through strategies such as offering loyalty programs, upselling and cross-selling products or services, and providing exceptional customer service.
Cost per impression (CPM) measures the cost of displaying an ad to a thousand viewers. It is calculated by dividing the total cost of the advertising campaign by the number of impressions and then multiplying the result by 1,000.
For example, if a business spends $100 on a campaign that generates 10,000 impressions, the cost per impression would be $10 ($100/10,000 x 1,000).
CPM is an important metric for businesses as it provides insights into the cost of each impression and can help businesses determine the cost-effectiveness of their advertising campaigns.
CPM is often used in display advertising, where businesses pay for ad space based on the number of impressions their ads receive.
The average cost per impression can vary widely depending on the type of advertising campaign, the industry, and the competitiveness of the market.
Businesses can optimize their targeting and ad creativity to reach the right audience, increase the likelihood of engagement, and ultimately improve the cost-effectiveness of their advertising campaigns.
Ad targeting can be done by targeting specific demographics or interests, using engaging visuals or messaging, and testing different variations of ad creative to determine which performs best.
Quality score is a metric used by search engines (like Google and Bing) to measure the relevance and quality of ads and keywords in paid search campaigns.
It is calculated by considering various factors such as ad relevance, expected click-through rate (CTR), and landing page experience. The quality score ranges from 1 to 10, with 10 being the highest quality score.
The quality score is an important metric for businesses as it affects the ad rank and cost per click (CPC) in paid search campaigns.
A higher quality score can lead to a higher ad rank and a lower CPC, resulting in more clicks and conversions for the same budget.
For example, if a business has a high-quality score for a keyword, its ad will appear higher in the search results, and it will pay less per click compared to a competitor with a lower quality score for the same keyword.
According to sprout social, a quality score of 7 or higher is considered good, while a score of 4 or lower is considered below average.
Businesses can focus on improving the relevance and quality of their ads and landing pages to improve the quality score by ensuring that the ad copy is relevant to the targeted keywords, using high-quality images or videos, and providing a positive user experience on the landing page.
Businesses can also improve their quality score by optimizing their targeting and bidding strategies by targeting specific locations or demographics, using ad scheduling to show ads during peak times, and adjusting bids based on the performance of different keywords.
Ad relevance measures how closely an ad matches the intent and interests of the target audience. It is one of the factors used in calculating the quality score in paid search campaigns and is determined by the content of the ad, the targeted keywords, and the landing page experience.
Ad relevance is an important metric for businesses as it affects the ad rank and cost per click in paid search campaigns. A higher ad relevance score can lead to a higher ad rank and a lower cost per click, resulting in more clicks and conversions for the same budget.
For example, if a business is targeting the keyword “running shoes” in a paid search campaign, its ad relevance score will be higher if the ad contains relevant information about running shoes, such as brand, style, and price. On the other hand, if the ad is about hiking shoes, the ad relevance score will be lower, resulting in a lower ad rank and a higher cost per click.
Ad relevance is measured on a scale of 1 to 10, with 10 being the highest score. A score of 8-10 is considered a good Facebook ad relevance score, according to Wordstream.
Businesses can focus on creating ad copy that is relevant to the targeted keywords and audience to improve ad relevance scores by using specific keywords in the ad copy, highlighting unique selling points, and providing a clear call to action.
Businesses can also improve ad relevance by optimizing their landing pages and ensuring that the landing page provides relevant & useful information to the user, is easy to navigate, and has a clear call to action.
Ad rank measures the position of an advertisement on the search engine results page (SERP). Ad rank is calculated by multiplying the maximum bid amount by the ad quality score.
Ad rank is an important metric for businesses as it determines the visibility and success of their ads in paid search campaigns. A higher ad rank can lead to a higher position on the SERP, resulting in more clicks and conversions.
For example, if two advertisers are targeting the same keyword, the advertiser with the higher ad rank will have their ad displayed in a higher position on the SERP compared to the advertiser with the lower ad rank.
Clearly, an advertisement with a higher ad rank can result in more clicks and conversions for the advertiser with a higher ad rank.
Businesses can focus on creating relevant and engaging ad copy, using targeted keywords, and ensuring that the landing page provides a positive user experience to improve ad rank.
Businesses can also improve ad rank by increasing their maximum bid amount, although this may not always be the most cost-effective solution.
Ad impression share measures the percentage of times an ad is displayed compared to the total number of times it was eligible to be displayed.
It is calculated by dividing the number of impressions received by the number of impressions the ad was eligible to receive.
Ad impression share is an important metric for businesses as it indicates the visibility of their ads in paid search campaigns.
A higher impression share indicates that the ads are being displayed more frequently, which can lead to increased brand awareness, clicks, and conversions.
For example, if a business is targeting a specific keyword in a paid search campaign and its ad impression share is 80%, it means that the ad was displayed 80 times out of 100 times it was eligible to be displayed.
Ad impression share can be broken down into two categories: search impression share and display impression share.
Search impression share measures the percentage of times an ad is displayed on the search results page, while display impression share measures the percentage of times an ad is displayed on other websites in the display network.
To improve ad impression share, businesses can focus on increasing their ad rank by improving the ad quality score and increasing their bid amount. They can also expand their targeting to reach a larger audience and increase their eligibility to receive impressions.
By optimizing their ad rank and expanding their targeting, businesses can increase their ad impression share and ultimately increase their return on investment.
Conclusion
In conclusion, understanding and tracking the right paid advertising metrics is the key to unlocking success in your online business. By focusing on actionable metrics such as CTR, CPC, conversion rate, and ROI, you can optimize your campaigns for maximum effectiveness and drive real business results.
However, simply tracking these metrics is not enough. To truly succeed in paid advertising, you need to continually test and refine your PPC strategy to stay ahead of the competition and drive sustainable growth for your business.
That’s where ABK Digital comes in. Our team of experts specializes in helping businesses of all sizes achieve success through paid advertising.
From launching new campaigns to optimizing existing ones, we provide the guidance and support you need to get the most out of your advertising spend.
So why wait? Contact us today to learn more about how we can help you achieve success through paid advertising and beyond. Let’s work together to take your business to the next level!
Also, stay tuned for our next blog in the Digital Marketing Metrics series: Email Marketing Metrics.
