You’ve set up your account. Launched your campaign. And your ads are live. Check!
But now what? Is it working? If you’re wondering what’s up and down with performance and how to make sense of the metrics, then this blog post is for you!
Tracking campaign performance is essential to determine if you’re heading in the right direction. Or you’ll leave your investment going completely out of the blue. Google Ads provides valuable insights and real-time performance tracking, which allows you to identify where to make improvements and changes so that your campaigns can perform even better. And eventually bring you a higher return on ad spend (ROAS).
Let’s dive into the top 9 metrics you need to know!
1.Impressions
Impressions represent the number of times your ads have been shown. Keep in mind that an impression doesn’t necessarily mean your ad was seen by someone. It simply indicates that your ad was triggered by a search term matching one of your keywords. While having a lot of impressions is good, it’s not the ultimate goal for search ads. The focus is rather on generating clicks and conversions, since the main objective is to get traffic and new visitors that turn into leads.
Calculation: Costs / Conversions
2.Clicks
Clicks refer to the amount of traffic generated to your website from your campaigns. If your campaign receives 400 clicks in a given period of time, it means 400 people have visited your website. The number of clicks you receive depends on the relevance and attractiveness of your ads, and your daily budget. Initially, your goal should be to drive traffic and reach your target audience. Remember, you pay per click, so keep in mind to have budget that allows for a good volume of traffic to gather valuable data over time.
Calculation: Total Clicks
3.CTR (Click-Through Rate)
The CTR is the percentage of clicks your ad receives compared to the number of impressions it receives. If your ad receives 1,000 impressions and gets 125 clicks, your CTR is 12.5%. A high CTR indicates that users are choosing your ad over others and that it’s relevant. Google’s algorithm values a high CTR, so you should aim at keeping it up. It can help improve your ad quality and potentially lead to better ad positions and lower costs per click (CPC). Win-win!
Calculation: Impressions / Clicks
4.Costs
Costs represent the total amount you’ve spent on your ad campaigns. It’s important to keep track of your spending to see if you’re reaching your daily budget, and know your potential for more or less traffic. Google calculates costs based on your daily budget, ensuring that your total costs in a 30-day period don’t exceed the average daily spend. Let’s say your daily budget for a campaign is 20,00€. The costs in 30 days won’t exceed 600,00 €, but spending can vary from day to day.
Calculation: Total amount spent
5.Avg. CPC (Average Cost Per Click)
The average CPC is the average amount you pay for each click on your ads. If you spend 2,100€ and receive 700 clicks, your average CPC is 3€. Ideally, you want to keep your CPC low to maximize your budget and get more visitors for the same costs. Give it at least 2 weeks from your campaign launch for a more correct estimate.
So what defines what you end up paying per click? Short answer – it depends on your business and the competition. High competition brings the costs up, and low competition brings the costs down. Other factors such as industry, geographic location and seasonality can also influence your CPC.
Calculation: Costs / Clicks
6.Conversions
Conversions are valuable actions taken by visitors on your website. This can be anything from form submissions, sign-ups, free trials, purchases, and calls. Tracking conversions is probably your no. 1 priority! It’s the absolute metric that drives value to your business. Your goal is to generate conversions that match your business objectives and finally make your Google Ads profitable.
Calculation: Total no. of conversions
7.Cost./ Conv. (Cost per Conversion)
Cost per conversion reveals how much you spend to acquire a single conversion. This metric is calculated by dividing the total costs of conversions by the total number of conversions. Let’s say you spend 500€ on a campaign that generates 20 conversions. Your cost per conversion would be 25€.
Ideally, you want to spend less on acquiring a conversion than the revenue it brings in. That’s how your ads become profitable! Lower cost./ conv. can mean higher profits, but it’s a gradual process. You need to collect data and make ongoing improvements to optimize campaign performance.
Calculation: Costs / Conversions
8.Conversion Rate
The conversion rate measures the percentage of conversions you achieve compared to the number of clicks. If your ad receives 200 clicks and generates 10 conversions, your conversion rate is 5%. You should always check the conversion rate besides no. of conversions alone. A higher conversion rate indicates that your ads are performing well and attracting relevant traffic. A very low conversion rate by contrast could mean you need to make changes to targeting, or optimizing the landing page.
Calculation: Clicks / Conversions
9.Conversion Value
Conversion value represents the total value generated from your conversions. You can assign a value to your conversion actions and this way track what you’re getting back from your investment. If you sell products, it’s pretty straightforward. Purchase conversion value = sale price.
But you can also assign a conversion value to other actions – like sign-ups, free trials, or lead forms, even if there isn’t a direct sale. The value here should be based on the estimated impact it brings to your business. Let’s say you run a lead generation campaign and each lead is worth 20€. If you generate 50 leads, the conversion value would be 1,000€.
Calculation: Conversions * Conversion value
