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These Are the PPC Metrics That Actually Matter

If you’re anything like me, you’ve participated in a couple of DIY home improvement projects. At the beginning of these projects, with YouTube training videos as my sidekick, I have an irrational sense of confidence in my handyman abilities.

When I’m tracking down my supplies at the local hardware store, I often find the products priced and displayed as “good,” “better” and “best.”

Good,-Better,-Best-Image-V2_02

The frugal side of me tries to argue that “good” is good enough, but is there something about the “best” product that will secure my DIY victory?

With PPC advertising, we often face the same dilemma; we need to decide which metrics are “best” to measure the success of our campaigns. There’s a wealth of content and opinions on how to measure PPC success, which can get confusing.

This post will help you understand how different metrics can paint very different pictures of PPC campaign performance.

I’ll show how traffic-focused metrics can be a good starting point, how conversion-focused metrics are even better and how ROI-focused metrics provide the most complete picture for making meaningful changes to your campaigns.

Let’s dig in.

Good PPC metrics are traffic-focused

Many advertisers will default to looking at the click-through rate or cost per click when determining the success of a campaign. AdWords provides a lot of traffic-focused metrics that are incredibly useful, including underused gems like device segmentation and impression share.

And while those are definitely a good start, it’s important not to get so distracted that you lose sight of your basic business goals: generating a profit.

My agency has serviced or audited over 1,000 AdWords accounts. Believe it or not, almost half of them had not set up conversion tracking.

Conversion tracking allows you to measure conversion actions like a purchase or a lead submission in your ad platform, usually by placing a code snippet on a thank you or order confirmation page.

Without that piece of code, the only metrics you can measure are related to traffic, such as search impressions, clicks and click-through rates. Let’s look at an example to see why this is problematic.

What traffic-focused metrics tell you

Imagine you’re a mortgage company and each new paying customer is worth on average $3,500 in revenue with 50% in gross margin.

If you haven’t set up conversion tracking, you’ll mostly end up looking at reports like this:

chart1_new

If we’re only looking at traffic-focused metrics, our top campaign seems to be Campaign 5, which has the most clicks, the best click-through rate and the lowest cost per click.

Meanwhile, Campaign 4 has expensive clicks – which looks like a red flag!

But the truth is this data alone can’t really tell us whether the campaigns are successful to a company’s bottom line. For our mortgage company, we need to know whether the clicks are actually translating into useful leads.

Better PPC metrics are conversion-focused

If you’re already using conversion tracking, pat yourself on the back: you’re better off than much of the competition.

If you’re not, then get conversion tracking set up immediately. It’s easy to set up on most platforms like Google AdWords and Bing Ads (and if you’re using Unbounce you can put the tracking code right on a built-in thank you page).

Think beyond web conversions

Conversion tracking is more than just web leads and sales: among new accounts I’ve audited or onboarded, I’ve found that approximately 75% of advertisers who take phone leads don’t track them as conversions.

For many industries, phone calls are the main source of leads, so it’s critical to include calls in your conversion tracking! Many call tracking platforms have built-in ways of setting this up, and Google has a solution for AdWords advertisers here.

Call leads are more valuable for some businesses than for others, so you’ll want to keep in mind that not all types of conversions are necessarily equal – but the first step is making sure everything is tracked and measured.

What conversion-focused metrics tell you

Let’s say our mortgage company joins the big leagues and sets up conversion and call tracking. Here’s how that report looks:

Better_final
Now we can track how many people are actually signing up for the service, not just clicking our ads.

Now we can start identifying our top-performing campaigns using cost per lead data (cost per conversion in Google AdWords). You’ll notice that Campaign 5 has the best cost per conversion, so it still looks like our top performer. Campaign 4 still looks like trouble.

But while conversions are great, at the end of the day what really matters is whether leads became paying customers.

Conversions tell us how many leads our company got, but not how many actually signed up to refinance their homes or how much revenue they brought in.

The best PPC metrics are ROI-focused

For marketers who want to use the most meaningful data, let’s move to the golden metric: actual ROI!

That means tracking leads from click to close and measuring revenue on a per-lead basis. When you understand which campaigns, ads and keywords are actually generating revenue, you’ll be way ahead of competitors who have no idea where they’re making or losing money.

What ROI-focused metrics tell you

Let’s say our mortgage company decides to figure out exactly which leads are earning revenue. We can track specific leads in our CRM back to each campaign, set up separate phone numbers for each campaign and record which calls led to sales.

Using our customer value numbers from above, we can calculate the following report:

Best_final
We calculated revenue by having our CRM capture the Campaign ID in Google Analytics, then created unique phone numbers for every campaign so we could track every sale back to its source. Then we calculated the revenue value of every customer attributed to a PPC campaign.

Suddenly Campaign 4, which looked so bad before, is now our hero! Not only does it have the best ROI, it brings in the most revenue and the most sales — and that’s with the fewest conversions and second-fewest clicks.

Now we know something much more useful than cost per conversion — we know how valuable a conversion is. We know where to focus our marketing efforts to maximize revenue, and where we can make improvements that impact the bottom line.

We could then respond by allocating more budget to Campaigns 4 and 5.

Meanwhile, Campaign 3 gets a lot of traffic and conversions but has a poor ROI, so we can get to work at rewriting ads and landing pages to better qualify those leads.

Those are the kinds of changes that have meaningful results!

3 simple ways to track and measure your PPC ROI

The example above mirrors what we often see in the lead generation space: more expensive leads can often be the most qualified and produce the most revenue. But without breaking down campaign ROI you never know.

So how do you move beyond conversions and start focusing on ROI?

Here are a few simple ways to get started:

  1. Call tracking: As mentioned above, get a call tracking solution that lets you track PPC calls independently and preferably at the keyword level. AdWords has a feature that lets you set it up on your landing pages here. Then make sure you’re reviewing calls to see which incoming leads are converting into sales.
  2. CRM integration for lead generation: A good CRM will integrate with any PPC platform, so you can look at customers and know which campaigns brought them to you. To determine ROI, compare sales data to the metrics in your PPC campaigns to get cost vs expected revenue.

    Getting this set up depends on your specific CRM, but here’s how to get started with Zoho, Infusionsoft, Salesforce, and Hubspot. Unbounce also has built-in hooks for integrating with most CRMs.
  3. Dynamic revenue tracking for ecommerce: The nice thing about ecommerce is that platforms like AdWords allow you to set a conversion value for specific products, so you can compare revenue and learn your ROI right from AdWords. Don’t miss out on this if your site includes a customer checkout process.

Every metric matters

PPC marketing leaders know that all the metrics we’ve discussed are valuable – they work to improve the three categories over time, while focusing most of their efforts on ROI to move their profitability in the right direction.

Traffic data like impressions, clicks and cost per click tell you how much search demand there is for your service and how many people are responding to your ads.

Better metrics like conversion data tell you how effective your ads and landing pages are at generating leads, as well as how much your leads cost.

But nothing tops actual ROI data: how much conversions are worth to your company’s bottom line. As we’ve seen, that kinda of data lets you focus on making changes where you can make the biggest difference!

At the end of the day, the key is to look at the right metrics for the right situations and use that data to make the most meaningful changes to your campaigns.


About Jacob Baadsgaard
Jacob Baadsgaard is the Founder & CEO of Disruptive Advertising, a Utah-based PPC agency that uses PPC, CRO and ROI-focused analytics to grow businesses. When Jacob's not working, you'll find him hanging out with his beautiful wife and three daughters or on the river fly fishing. Connect with him on Twitter or LinkedIn.
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  • Couldn’t agree more! So many small businesses open up an Adwords Express account and never get around to setting up converstion tracking, which is basically treating digital marketing the same way as old-fashioned outbound marketing — just as a cost of doing business rather than an ROI-focused effort. In my experience I’d say closer to 75% of Adwords accounts don’t have conversion tracking enabled.

    Some of the best experiences I’ve had in my agency career is teaching a client the difference between a conversion-focus and an ROI-focus in their Adwords marketing.

    The other MAJOR opportunity for improvement I see most frequently neglected is A/B testing landing pages. With tools like Optimizely there’s really no excuse not to A/B test and simple split testing puts your client ahead of 80% of their competitors.

    • You are spot on George, A/B testing can often provide the biggest lift. The only issue I have with A/B testing is that too often it is based on lift to conversion rate and not lift to the bottom line. Glad to see others thinking along the same lines :)

  • Lyle Christensen

    YES!!!!!!

    I’ve been pushing for this for the longest time at work. What good are the metrics if you can’t even quantify the dollars they bring in? You gotta put the money where the mouth is.

  • I just went over this with a business that I had conducted an AdWords audit. They had invested so much time in building up their quality score and CTR and every recommendation I gave them, they said, “We can do that.” Ironically, they thought their campaign was solid, but they still had not set up the most elementary ecommerce tracking to track their online sales. It is not hard to set up that piece, and gain transparency into the sales generated from paid, referral trafffic or organic search.

    • Exactly! There should be no excuse in the e commerce world as tracking revenue is very simple. Tracking revenue in a long sales cycle lead funnel is more tricky but should still be done.

  • Great artcile really. I think the most challenging metric to measure is the “real” sales of a client. Sometimes is so hard to get that piece of information from clients….small business sometimes dont have a huge structure wich makes our job more challeging to say the least.

    Still great post as always! :)

  • Great points. I think there is still a large group of online marketers that feel like we should just trust that online advertising and social networking is improving our sales, even if they can’t directly prove it.

    As Nicolas pointed out, sometimes it’s hard to get at the numbers you need to make sure your efforts are directed in the right place, but it’s worth making whatever effort you can to get that information. You hit the nail on the head in this article–without sales information, you never know which approach is working best!

  • This is such a great article with solid examples. It’s helpful for me..
    Thanks Jake Baadsgaard

  • Absolutely agree. It’s a fact that a LOT of ad campaigns never even set up conversion tracking. I think this could be caused (in part) due to a lot of under-experienced marketing companies tend to sell “visits”. There’s no point on having a site’s visits incremented if those visits don’t grow conversion rate (at least in commercial sites).

  • What is best way to manage revenue from call conversions? I can set up call conversions on my end, but how do you instruct the sales team on how to keep track of leads for this. is this something typically handled through most CRMS?

    • We setup “success metrics” with our clients. For example if the call is over 5 minutes. We use CallRail to track it – I have no stake in them it just works for my organization. You can also use a CRM and follow them along the sales funnel. That is typically for businesses with a longer sales cycle though

  • Thank you Jacob!

    Just a caution to those presenting ROI performance measurement data. The ROI calculation should be based on Net Revenue, not Gross Revenue. So the formula for ROI is: [Total Revenue MINUS Total Cost DIVIDED by Total Cost] TIMES 100. Otherwise, the ROI will be overstated.

    Now if we can just get all folks to understand than an Impression or Website visit is not a Conversion, the world would be a better place!

  • Jacob,
    Awesome article and thank you very for the free ebook, can’t wait to start reading it also. You brought up a few things that we need to look at on our site, although our conversions are a little harder to track being in the real estate industry, because of the referrals. Again, thanks so much for the hard work on the article.

  • Great article, I myself have been guilty of stopping at just the conversion tracking. I do think that it is important to get into the ROI, but that can be difficult (the majority of our clients are lawyers so they don’t always disclose their rates to us). When this happens we use sub-conversions such as phone calls over five minutes or certain types of form submissions. You are right that sometimes the most expensive conversions are the most qualified and in the end that is what matters.

  • What’s the best course of getting past just tracking conversions and tracking ROI for clients who A) do not have a CRM or B) do not utilize their CRM? We have home builder clients, for example, where the sales cycle is much longer. What’s the best way to determine if the lead is qualified when they arent even updating the status of the lead in their CRM? We use call tracking metrics as well for some clients and trying to get them involved with using the interface, but they don’t always want to.

    • Hey Nick, I would recommend using hidden fields with your Unbounce forms to pass the keyword/ad group/campaign etc… This information will then be stored in Unbounce and if nothing else you can do an export of the Unbounce data and use a VLookUp in Excel to compare against future sales data matching by email address or phone number.

  • Rodrigo Ventura

    Olá,

    Tenho interesse na compra e venda de leads dos segmentos; plano de saúde (PME/PJ, PF e sindicato), seguro auto, cursos online e Tv por assinatura.

    Base de clientes que já possuam plano de saúde também nos interessa.

    Caso vocês gerem ou comprem, fico no aguarado do retorno.
    (85) 9 9414-4613 pode ser por whats. i3corpms@gmail.com

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  • Jake

    Great and very useful article.

    I sit back with a question:
    How do you track the ROI for small customers/clients who do not have a CRM system or unbounce etc. and are not willing/do not have the funds to buy these programs?

    These are the kinds of clients I typically deal with and measuring the ROI is usually a problem due to the facts mentioned above. So while it may be possible to measure their conversions, measuring ROI is very difficult as I see it. But maybe you have a good way around this when they don’t have a CRM system or unbounce etc.

    Thanks!

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