A KPI (key performance indicator) is a metric that indicates the effectiveness of your Google Ads campaigns. KPIs can vary from business to business – Not everyone will worry about Quality Score if their leads are relevant with CPA under control. However, I am going to talk about 7 KPIs that apply to almost every business and companies (and PPC managers) should measure these KPIs regularly.
Google Ads KPI #1 – Click-Through Rate or CTR
It is the ratio between the number of clicks and the number of impressions (clicks/impressions*100) and it is measured in percentage.
It should be a KPI because it indicates how relevant and useful your ads are to your audience. CTR also impacts your Quality Score which ultimately impacts your costs. A high CTR is a sign that your ads are relevant to your audience. Anything below 2% is a low CTR and should be improved.
CTR should be measured separately for keywords and ads.
If you have a low CTR even after targeting the right keywords, then you should try 2-3 different ads with different messaging. Additionally, a low ad placement could also result in low CTR so you should make sure that you are bidding high enough for your ads to show on top.
Ads should also be monitored for CTR. If you have 2-3 ads in an ad group, it’s good to check them on a monthly basis. If the CTR of an ad is dropping continuously, replace it with a new ad with some different messaging. Note: Don’t change ads too often based on short term data. Always consider a bigger time frame rather than a shorter one.
Google Ads KPI #2 – Conversion Rate
Conversion rate is probably the most popular KPI. It should be a KPI because it shows (in percentage) how many people converted out of all the people who clicked on an ad.
Targeting the right keywords for your offer is the first step to achieving a high conversion rate. In addition to this, better aligned landing pages and ads also improve conversion rates.
Just like click-through rate, conversion rate should also be measured separately for keywords and ads.
Google Ads KPI #3 – Quality Score
Quality Score is measured for keywords on a scale of 1 – 10. It should be a KPI because a high Quality Score improves ad position and lowers cost per click. A high quality score means your audience is finding your ads and landing pages relevant and useful. Quality score depends on 3 things: 1. expected click-through rate 2. ad quality 3. landing page quality.
Keep a weekly or bi-weekly track of quality score of individual keywords to understand how it is impacting your costs and conversions.
To improve your quality score, write ads and build landing pages relevant and useful to your keywords.
Google Ads KPI #4 – Impression Share
Impression share shows (in percentage) the number of times your ads were shown divided by the total number of times your ads were eligible to be shown. Confused? Look at the below image for easy understanding.
Have you noticed a drop in clicks from a particular keyword or campaign? A low impression share could be a reason.
Impression share is an important KPI because a low impression share means your ads are not getting the number of impressions that they should actually be getting.
You might be having a low impression share because of a low budget or a low ad rank or both. The 2 columns, Search lost IS (budget) and Search lost IS (rank) give clarity into this.
To improve your impression share, make sure that your budget is high enough, you are not under-bidding on your keywords, and your ads and landing pages are relevant to your keywords.
Google Ads KPI #5 – Cost Per Click or CPC
Pretty self-explanatory, it is the actual amount that you spend on one click. Cost per click should be a KPI because it affects your cost per conversion. If your CPC is high, your cost per conversion will automatically be high.
A good practice is to monitor and track CPC every month. The actual CPC depends on multiple factors like your Maximum CPC (the maximum amount that you are willing to pay for a click), your Quality Score, your bidding strategy, how your account is set up, etc.
Google Ads KPI #6 – Cost Per Acquisition or CPA
One of the most popular KPIs, cost per conversion is the amount that you pay for one conversion. It should be a KPI because it lets you measure your PPC ROAS (return on ad spend). It is calculated by dividing your spend by the number of conversions.
Reducing the CPA is a big reason why people hire PPC agencies in the first place. Reducing the CPA and keeping it under control requires a comprehensive strategy and constant efforts. Everything from keywords to ads to landing pages to search terms has to be optimized to reduce CPA.
Google Ads KPI #7 – Lead Quality
There’s not any metric for lead quality in Google Ads interface. However, lead quality should be a KPI and must be analyzed to make your PPC campaigns more profitable.
There will always be some irrelevant leads no matter how much you optimize your campaigns. However, with proper tracking in place, you will be able to identify which keywords, ads, and campaigns are bringing irrelevant or bad leads. This will help you reduce bad leads in the long run.
So make sure that you implement proper tracking (with UTM parameters) in your campaigns. If a keyword is continuously bringing bad quality leads, you should look at the search terms (although Google has started hiding search terms data now, but it does show more than 50% of this data) and add important negatives.
In addition to this, make sure that your messaging in ads and landing pages are relevant to audience.