A few days ago, Google Ads turned 20. It is now the biggest PPC marketing platform, with an advertising revenue of over $42 billion in 2019.
Google Ads has a ton of metrics and it only makes sense that inexperienced marketers might get confused.
And that’s why in this article, we’ll go through the most important metrics you should be tracking.
The impressions metric is about how many times your ad has been displayed or seen.
To increase this metric, you may want to increase your campaign budget, as your budget controls how often your ad is shown. Alternatively, increasing your bid or improving your ad quality are both effective ways to raise the number of impressions.
What kind of pay per click marketing would that be if clicks weren’t taken into account?
This metric shows how many times your ad was clicked.
In general, you shouldn’t make any decisions on this metric alone, as the number of clicks out of context doesn’t actually show the effectiveness of your ad. The number of clicks is used in a different metric, namely the click-through rate, which we will examine a little later.
The ‘cost’ metric in Google Ads has the same meaning as in real life. It equals the amount of money you are paying. There are two main types of costs in Google Ads.
Cost per click (CPC)
Every time a user clicks on your ad, you pay Google a certain amount of money. This is known as cost per click or CPC. CPC is an interesting metrics because a well-optimized campaign should lead to a declining cost per click over time.
Your average cost per click is calculated by dividing the cost of your clicks by the number of clicks. Here’s the CPC formula:
Average cost per click = Total spend / # of clicks
For example, if you spend $100 and get 500 clicks, then your average CPC is $0.2.
But what defines the cost per click? There are three main parameters that define the CPC of your ads:
- Maximum bid. A bid that you set which represents the most you are willing to pay for every click on your ad
- Quality score. An estimate of the quality of your ads, keywords, and landing pages. It’s reported on a 1-10 scale.
- Ad rank. The value that Google Ads uses to determine an ad’s position on the SERPs.
Also, keep in mind that much like any cost, the average cost per click changes around the world. US businesses are currently paying the highest cost, coming second only to the United Arab Emirates.
Furthermore, CPC gets higher the more competitive the industry is.
Average cost per action (CPA)
Also known as cost per acquisition, the CPA metric measures how much money you need in order to convert a user.
Cost per action = Total spend / # of actions
So what counts as an action? An action is any desired goal you set. For example, an action for an ecommerce store can be when a visitor makes a purchase. Likewise, an action for a business that offers B2B services can be when a visitor completes a certain sign-up form.
As you probably guessed, the CPA is usually higher than the CPC. You first need to make the user click on your ad and then make them perform an action.
In our CPC example, of all the 500 people that clicked on the Google Ad and visited your website, not each one of them took any action. Many of them just clicked the ad, spent a few seconds on your site, and then left (known as a bounce).
Remember that we had spent $100 and got 500 clicks, with a CPC of $0.2?
Now, let’s say that 50 out of the 500 clicks actually made an action.
According to the formula, your CPA is $2.0.
As with actions, a conversion is not a fixed metric. You define what counts as a conversion and then you can count said conversions.
To measure your conversion rate effectively, Google Ads has a simple function to do this job, called conversion tracking.
5. Click-through rate (CTR)
This Google Ads metric counts the effectiveness and relevance of your ad. Accordingly, the click-through rate shows how often users click on your ad.
To calculate the CTR of an ad, you divide the number of clicks by the number of impressions. Since we’re talking about a rate, you then have to multiply that number by 100. Here’s the formula:
Click-through rate = # of clicks / # of impressions X100
For example, if your ad appeared 200 times and 15 people clicked on it, then your CTR is 7.5%.
So what is considered to be a good click-through rate? It’s said that the average CTR across all industries is 5%.
Is there anything you can do to increase the CTR of your Google Ads? Yes, there is!
One of the best ways to increase the CTR of any of your ads is to write a better ad copy. When it comes to Google Ads copywriting, using emotional triggers, aiming at local audiences, and sounding natural are some of the best practices.
CTR by ad groups
An ad group in Google Ads is defined as the group of ads that are targeting a shared set of keywords. Click-through rate by ad group is simply the click-through rate of each of your ad groups.
CTR by campaigns
A Google Ads campaign is a set of one or more ad groups. The click-through rate by campaigns is the CTR of any of these campaigns and tracks their effectiveness.
You now know the most important Google Ads metrics.
To summarize, lowering the cost per click and cost per acquisition are usually top priorities for performance marketers. Make sure that your landing page is relevant to your advertising copy, and include your unique selling point in your copy. Try to find out what works and what doesn’t, and don’t forget that experimentation is key to a successful Google Ads campaign.
If you’re working for a Google Ads agency or you have to show these metrics to your boss, you should consider putting all the data in a presentable form.
One of the easiest ways to do that is with Google Data Studio, which is a free tool that allows you to create interactive dashboards.
And if you don’t want to reinvent the wheel, you can get started with this Google Ads reporting template from Supermetrics.
About the author
Nicolas is the copy/content guy at GrowthRocks, a growth hacking agency based in the UK. He writes copy and creates content for small startups and multinationals alike.
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