— June 26, 2019
Last month we looked at all the top eCommerce KPIs to follow and how to create your own based on your goals. But what about those KPIs that specifically help you monitor and optimize your Google ads? What are the must-track PPC KPIs to ensure your ads are not only bringing in a lot of juicy, targeted traffic, but doing so within your budget?
You asked, we answered!
This week we will run through the 9+ most important Google Ads KPIs and metrics to monitor to ensure Google Ads success. Ultimately helping you to increase conversions and order values while reducing your cost per acquisition.
Google Ads KPI #1: Budget Attainment
The first KPI we will look at isn’t a common one. If you want to keep a close eye on how close your Google Ads results came to your goals within the budget you set for the month, then budget attainment is a vital eCommerce Google Ads KPI.
Often overlooked by beginner Google advertisers, this KPI is very important for the following reason:
Marketers tend to over- or under-spend when adjusting bids and budgets daily because Google ad campaigns require constant optimization and adjustments. Budget attainment, however, will show you how your budgets are being managed.
Simply put, your budget attainment KPI is the total Google ad spend for the month vs. the allocated budget.
If you are exceeding your overall monthly budget but are getting good results, it is time to increase – if you have the spend. Or if you’re leaving money on the table and getting good results, then it’s time to add more campaigns to your Google Ads strategy. If, when looking at the month as a whole, you’re over-spending and getting bad results, it’s time to pull back and optimize your campaigns so that you’re not throwing away your allocated budget.
Google Ads KPI #2: Cost Per Acquisition / Conversion (CPA)
Yes, reaching your conversion targets is cause for celebration. But what if you notice from your budget attainment reports that you are exceeding your budget in a huge way? Then it’s time to look at what each campaign, ad group or ad conversion is costing you. This is where your CPA comes in. CPA is the cost of acquiring each new customer and is worked out as follows:
Total cost of conversions ÷ total number of conversions = CPA
Let’s say that your CTRs are great and your CPCs (we will talk about these in more detail below) are within budget, but your conversions are low – your CPAs will be higher than they should be, eating into the profits you do make. There are a number of reasons why this could happen, such as having either landing page/Google ad content discrepancies or an optimized web store that doesn’t instill trust or isn’t easy to navigate. Or if your conversions are great but your CPCs are too high, then again, you may find your CPAs are too high and leaving you without profit. Ultimately, you should be setting your maximum CPAs ahead of time to ensure your business is still profitable, and testing and optimizing your ads and store to ensure you do not exceed it.
Pro Tip: Use Google’s Targeted CPA bidding technique to enable you to get as many conversions as possible without exceeding the CPA KPI you set. To use this, you will need to be doing at least 30 sales per month and have conversion tracking set up.
Google Ads KPI #3: Cost Per Click (CPC)
CPCs are probably the most well-known eCommerce KPI to monitor when running Google ads. It’s the amount you are paying every time a user reacts to your ad. You work it out as follows:
Total campaign cost ÷ total number of clicks = CPC
In short, it’s the cost of your ad being displayed and the clicks it receives when displayed. Remember: with Google, the bids you set will play a part in the final CPC of your ad. If you are bidding on terms with a lot of competition and in a popular niche, you may need to plan for a higher CPC result to ensure you are able to compete. At the same time, if your CPC is too high and your conversions are low, your CPAs may be higher than the profit you earn on selling.
It is a balancing act.
Therefore, it’s best to work out ahead of time what your maximum CPC will be for Google Ads, to ensure you’re able to get as many results as possible for the budget you have. AKA: good ROIs. Here is a step-by-step guide for working out your max CPC:
Work out the amount of profit you can earn with each sale. Remember to take your costs into consideration. You can do that as follows:
Average lifetime value per acquisition – (taxes + internal costs) = acquisition profit
Next, you will want to work out what your current conversion rate is.
Total conversions ÷ total clicks = average conversion rate
Use your profit equation and conversion rate averages to work out the CPC where you break even.
Average conversion rate X acquisition profit = break-even CPC
Lastly, you will need to adjust for CPC fluctuations and profitability. You want to make sure that your max CPC is lower than your break-even CPC, as this will ensure you are not using all your profits. The trick is to not go too low, or you won’t get the reach and the clicks. And not to set them too high, or you will be spending far more than you’re making. Generally speaking, you want to aim for around 70% of your break-even CPC, but you will want to do the math and see what works for your business and budget in terms of how competitive your niche is.
Break-even CPC X 0.70 = max CPC
Google Ads KPI #4: Quality Score
Your Google Ads Quality Score is one of the most influential PPC KPIs because it not only summarizes how relevant your ads – and their landing pages and keywords – are to your shoppers, but plays a direct role in how Google decides which ads to show. It will also directly affect the cost of the clicks.
So, what is a good Quality Score for Google Ads?
Quality Scores are reported on a scale from one to ten and awarded at the following levels:
Account level: This is based on the historical performance of all your keywords and ads in your account. A good score for your account should be 7-9.
Ad group level: Here, you are shown the Quality Score of each ad group. At an ad group level, you want to aim for a score of 6-9.
Keyword level: This will point to the relevance of your keywords. You should be aiming for the following scores:
- Ad keywords with high intent – Quality Scores of 7-9
- Branded keywords – Quality Scores of 8-10
- Ad keywords with low intent – Quality Scores of 6-8
- Competitor keywords – Quality Scores of 3 and up
Ad level: This is the Quality Score of each ad in your ad group.
Landing page level: This is the Quality Score of the URL linked to your ad.
Looking at Quality Scores at every level is hugely telling. Let’s say your average Quality Score at ad group level is 6, but some ads in the group are higher while one or two ads in the group have a score of 3. Then you know which ad you need to optimize first to improve your average. Other Quality Scores are for Display Network and mobile.
Quick Tip: If you’re looking to improve Quality Scores at each level, you should optimize your landing pages, test ad text, and double-check your keywords and their organization.
Google Ads KPI #5: Conversion Rate (CVR)
The next vital Google Ads KPI to track is your campaign conversion rates (CVR). This is the percentage or rate of your ad clickers who end up becoming paying shoppers. In other words, sales!
You can work out your Google Ads campaign or ad CVR by dividing the number of conversions for the ad or campaign by the total number of clicks. Ultimately, it ensures you are meeting your ROI eCommerce KPI objectives for Google Ads.
Conversions ÷ clicks = CVR
Why are CVRs so important for ascertaining Google Ads success?
Let’s say your campaign clicks are high but CVRs are low. This could point to issues with your landing pages and their CTA text, or if coupled with a bad Quality Score, will show URL irrelevancy issues – all in real-time. Additionally, it helps you set and keep your conversion goals in mind for your click/impression campaigns.
Google Ads KPI #6: Impressions and Impression Share (IS)
Impression metrics may not seem like an important indicator of your ad performance on their own. But they can point to scheduling and targeting issues. Why is that important? Well, you can craft a highly strategic ad that promises to convert clicks, but it’s worthless if no one is seeing it.
Newbie Tip: Some basic reasons for low impressions for your campaigns, groups or ads include forgetting to un-pause campaigns or your budget limitations (your total set budget has been used, your ad approval is still pending or your negative bid adjustments are too low).
However, it’s impressions in relation to clicks (i.e. your impression share) that are really telling. IS is worked out by dividing your campaign impression totals by the impressions the campaign was eligible for.
Impressions ÷ total eligible impressions = Impression Share
This can be found in your Google Ads campaign manager and analytics.
This data can be used in a number of ways. If you have a low impression share and ad rank or Quality Score, then you could try raising your bid or work on increasing your quality score. If the campaign is performing well but you’re not getting enough views, then it could be time to up your budget. Additionally, it could point to poorly performing keywords.
Newbie Tip: Absolute Top Impression Share (ATIS) is your impression share specifically for your Google Shopping campaigns. A low ATIS could point to a need to increase bids or budgets. The slight difference between ATIS and IS is that ATIS takes into account all your Shopping ads you’re showing at once. You can read more about the difference here.
Google Ads KPI #7: Clicks and Click-Through Rate (CTR)
The next top Google Ads metric you want to closely track are your clicks. Clicks are one of the most important indicators of a campaign’s success and simply measure the number of people who click your ads. But it is your click-through rates that really bring your ad performance home.
Because if you have the impressions but aren’t getting the clicks, then it’s time to test some ad variations. Your CTRs are the percentage of potential shoppers who click your Google ads after seeing them and can be viewed at a campaign and ad group level. Here are some quick tips on how you can raise your Google Ads CPCs.
- Edit and test meta description variations
- Review your focus keywords
- Test and optimize your CTAs
- Improve your engagement metrics – such as time on site, bounce rate, page views and dwell time
- Combine Google remarketing ads and Facebook marketing
Google Ads KPI #8: LTV (Lifetime Value)
Another super important eCommerce KPI to track to ensure peak ad performance is your LTV. This is an excellent indicator of your overall Google strategy health and will point to a lot of valuable data to help take your marketing – and business – to the next level.
In a nutshell, LTV measures how valuable each of your customers is to your business and will differ slightly per business owner. The more complex your business is, the more involved getting to this KPI will be as you will need to consider things like profit margins per counters, retention rates and the average lifespan of your shoppers.
Within Google Analytics, you are able to assess a variety of LTV metrics such as pageviews, session duration, revenue, transactions and goal completions per user. Choosing which one is most urgent to watch will be unique to your specific business, marketing or campaign goals. Let’s say your goal is to drive traffic or convert previous shoppers with Google remarketing campaigns: you may want to track pageviews LTV of promotional page or revenue LTV.
Google Ads KPI #9: Keyword Performance
The last top eCommerce KPI to monitor for Google Ads success is your keyword performance. After all, keywords are the foundation of Google Ads and without good performing keywords you will either not be reaching the right shopper or not reaching anyone at all. Therefore, it is vital that you have a clear keyword performance goal and then monitor and optimize based on your performance KPIs.
This will include metrics such as Quality Score, CTR, clicks and other important keyword performance indicators, and can be done at various levels. If you want to view keyword performance, these four easy steps will get you there:
Here you will be able to see which match types result in more conversions, clicks or impressions and which are duds. Remember to add irrelevant (non-performing) keywords that have low ROIs to your negative keyword list as this will help keep ROIs up and prevent unnecessary spend.
Ultimately, you need to look at your unique business, audience and objectives to find the top Google Ads KPIs to monitor for your success. As your business evolves, so will your goals and the KPIs you will put on top of your must-watch, must-optimize list.
Have questions on which Google Ads KPIs you should be monitoring for campaign success? Post them in the comments below!