When you’re paying for every click to your website, you’ll want to know where your money is going and that you’re paying for website visitors with real potential to become customers. With clicks getting more expensive and competition rising, the need to measure PPC performance is even more important. And that comes down to knowing
When you’re paying for every click to your website, you’ll want to know where your money is going and that you’re paying for website visitors with real potential to become customers.
With clicks getting more expensive and competition rising, the need to measure PPC performance is even more important.
And that comes down to knowing what PPC metrics to pay attention to, what data to trust, and how to use it to improve your performance.
Whether you’re running ads on Google, Meta or even LinkedIn, having and using the right data can help make your campaigns more profitable and make sure you’re putting more of your budget to work.
These are (what we think) are the PPC KPIs you should pay most attention to.
CTR is the number of people who click your advertisement compared to the number of people who see it, and is usually shown as a percentage.
Clicks / impressions x 100 = CTR
So, say 100 people see your ad and 10 people click, that’s 10/100 x 100 = 10% CTR.
CTR is important because it shows whether your ad is relevant to what people are looking for.
The higher your CTR, the more relevant your ad and the better your ad copy.
If your CTR is low, it means you need to review your ad copy and CTAs.
CTR can also impact other parts of your PPC campaign, like your quality score. If you’re CTR is low, your quality score will be lower, which could mean paying more for a click.
You can see the CTR of your ads in the campaign dashboard in your Google Ads account:
If your CTR is high (the average CTR across all industries is 3% but you can check your own industry benchmarks), then it’s a sign that your ad copy, creative, PPC keyword research and targeting are on point.
If it’s low, you can experiment with new headlines, change CTAs or even make new creatives for your ads.
Review your ad copy against search intent or focus it more on customer pain points.
Your cost per click is the average cost you pay when someone clicks an ad.
Say you spend £100 and get 10 clicks, your cost per click is £10.
Keeping your CPC under control is important because it dictates how far your PPC budget goes (the more expensive a click, the faster your budget runs out).
You can check your average CPC in your campaign dashboard in your ad account and can drill down into costs per keyword, audience, device and even time of day:
A lot of CPC management can be done with smart bidding functions in Google Ads.
Automated bidding strategies can be used to optimise how much you pay to achieve your campaign goals (clicks, conversions, etc).
But, it’s still worth keeping an eye on your CPC and reviewing which campaigns are proving profitable and converting well, and which may need to be paused.
Your conversion rate is the percentage of ad clicks that lead to a conversion (a purchase, form completion, etc)
So, if you got 10 conversions from 100 clicks, your conversion rate is 10%.
The average conversion rate in Google search ads is around 4%, but again, there’ll be industry benchmarks you can compare your ad results against.
Your conversion rate is a good indicator that your offer, ads and landing pages match what your customers are looking for.
If your conversion rate is low, it could be a sign that the messaging on your landing page isn’t working (especially if your ads have a high CTR).
This could mean you need to review your landing page copy, redesign the page to increase conversions or user experience, improve the landing page speed or review your CTAs.
You can review conversion rates in your Google Ads account if you have conversion tracking set up:
If not, you can track conversions by setting up goals in your GA4 account, or use data from your CRM to track where leads or customers are coming from.
Both cost per acquisition and cost per lead tell you how much you’re spending to get one conversion.
If you’re spending £1,000 to get 100 conversions, your CPA or CPL is £10.
This is one of the most important PPC KPIs to measure, because it tells you whether your ad spend is actually profitable.
If your CPA is £10 but a customer is only spending £7, you’re losing £3 on every customer.
Even if you’re making money per lead, it might be below your expected margin.
You can check your cost per conversion in your Google Ad account and drill down per campaign, ad group or even individual ad:
Cost per lead is all about assessing profitability.
You can use it to find campaigns or ads that need to be paused because they’re underperforming and not profitable.
Or, you can use it to identify ads with a low CPA that are performing well, so you can increase the budget and improve PPC results even more.
Long term, you can use CPA as a target in smart bidding strategies, using automatic bidding to set bids to reach your target CPA without manual management.
We’ve written quite a bit about PPC quality score in the past, so we won’t go into too much detail here.
Your quality score is a rating Google gives your ads from 1-10 based on your CTR, ad relevance and landing page experience.
Ads with a higher quality score earn you a lower cost per click and can improve ad position, even if you bid lower than a higher bidder with a worse quality score.
Return on ad spend shows you how much revenue you make for every pound spent on advertising.
So if you make £5 for every £1 spent, your ROAS is 5:1.
It’s worth mentioning that this is a metric of revenue generated, not profit.
So, while your ROAS is important, it should be combined with other metrics, like cost per acquisition and margins to make sure your campaigns are profitable.
Having said that, it can be a good way of finding campaigns generating high levels of revenue. If those campaigns are also profitable, these are the campaigns to scale.
It can also identify campaigns that are underperforming and need to be paused.
Lifetime value is the amount of revenue a customer generates over time.
It can be used in eCommerce as a measure of repeat customers. But, it’s more commonly used for subscription services like SaaS.
Understanding a customer’s lifetime value can help you plan and make bidding decisions long-term. For example, can you afford to spend more to acquire a customer if you know they’ll be a long-term customer and create more revenue over time.
Say it costs £20 to acquire a customer on a £1 a month subscription.
You might think that’s a poor return. But, if customers stay with you an average of 5 years, that £1 a month subscription is actually worth £60 over the customer’s lifetime, which is a better return.
Understanding LTV can help you identify the campaigns that generate the most long-term revenue (rather than one-off purchases).
If you know the lifetime value of a conversion in these campaigns, it can help you figure out if it’s worth increasing bids that might not look profitable short-term, but are over a longer horizon.
Ultimately, the metrics you use to measure PPC performance are based on your individual goals and business model.
But by understanding the metrics you have available, you’ll be in a better position to accurately assess the performance of your campaigns and make informed decisions.
If you’re not sure whether you’re getting the best returns or meeting your goals for PPC management, why not give our PPC agency a call.
We’ll set up a free strategy session to run through your goals, current marketing activity, and provide a free roadmap to make improvements.
Just complete the form with a time and date that works for you, and we’ll be in touch.
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