10 min read
Organic traffic can only get you so far.
We’d all love to wake up in the morning and see that we’ve popped up as the first result on Google for a highly competitive keyword, but sadly it doesn’t work that way.
SEO isn’t an overnight fix, so as we continue to grow our long-term searchability, we may also find it’s time to invest in paid advertising.
And what better place to advertise than on the search engine itself?
Google Ads is the largest online advertising platform on the internet and affects how we all search for products and services.
Instead of only thinking of Google as a search engine, we can start thinking of it as an advertising hotspot for marketing our business.
Depending on your current sales and marketing budget, allocating money toward paid advertising may feel a little daunting. But you can go into paid advertising more confidently when you have a clear understanding what metrics you’ll be measuring and what optimal results look like.
Setting up your first PPC ad using Google Ads is a great first step, but it won’t do any good if you aren’t tracking the performance of it.
As you venture into paid advertising for the first time, knowing what advertising metrics you need to keep an eye on will encourage you to increase your conversions over time. And the more you increase your conversions, the more revenue you will generate.
There are dozens of advertising metrics available to you but not all are created equal, meaning some will be more crucial to your success than others. The importance of each metric is dependent on your ideal ROI, or return on investment.
You’ve probably heard this term–ROI– thrown around before. It can be heard in boardrooms across the world, but what does it actually mean? And what does it mean for small businesses who operate mostly online?
The most basic definition of ROI refers to how much you receive from the investment of what you put in. This takes your net profit (which is your total revenue minus your expenses) and divides it by your paid advertising cost. Then you multiply that number by 100 to get your ROI percentage.
Every business owner wants to increase their ROI over time, which is why many of them turn to paid marketing options like PPC advertising to increase how much they can make off of their investment. It’s just good business.
With a focus on ROI, you’ll be able to spend your advertising dollars wisely. Before you put money behind your PPC ads, you’ll want to understand which paid advertising metrics are most important to your business.
As you start to create your first Google Ads campaign, you’ll notice a few statistics that are generated on the right side of your dashboard.
If this is your first time in the Google Ads platform, all of the numbers and graphs can seem intimidating. Luckily, you don’t need an MBA to understand what the analytics are trying to tell you. One way to make paid advertising easier to grasp is understanding the language Google Ads uses in their platform.
Sometimes called “cost per conversion”, this is an important paid advertising metric to measure when running a Google Ads campaign. Your cost per lead will usually tell you how profitable your paid ad is. The lower you can get your cost per lead, the better!
You may be asking yourself what a good cost per lead is. I’m here to deliver the dreaded “it depends” answer.
In popular industries like home insurance and personal injury law, your cost per lead will be much higher than someone who sells bullet journal supplies or interior design courses. This is because keywords have different levels of competition which directly affects the cost of each click.
If you want to get your cost per lead down (and who wouldn’t?), you might want to:
Too many advertisers look only at the cost per lead when they should also be aware of their cost per acquisition. This refers to the cost associated with turning a lead into an actual customer. Leads aren’t as valuable as customers so it’s one of the most important metrics.
If you’ve ever watched an episode of Shark Tank, you’ll hear the “Shark” investors ask what the company’s acquisition cost is. Entrepreneurs who don’t know the number usually leave the pitch room without an offer.
Before someone can invest in your business, or even before you can intelligently invest in paid advertising, your cost per acquisition needs to turn a profit. That means if your product costs $15 to make, a cost per acquisition of $20 won’t yield the best results.
Your cost per acquisition is typically calculated by dividing your total paid advertising spend by the number of customers you acquired. Google Ads does this calculation for you within the platform so you can save yourself from doing the math on your own. (Creators like me just breathed a sigh of relief!)
To ensure you’re getting the biggest bang for your buck for your PPC ads, you’ll want to pay attention to your return on ad spend. Commonly abbreviated to ROAS, this will measure how much revenue is generated from your ads.
Keep in mind that your return on ad spend looks at your revenue, not your profit. It only takes into account how much you’ve spent on paid advertising, not all the other expenses associated with producing and delivering your product (which is included in your ROI).
Your ROAS can be found by dividing your total revenue by your total ad spend for that offering, then multiplying it by 100 to get your percentage. ROAS is a great place to start but you should also calculate your ROI (which we talked about in detail above). This will give you a more full picture of how your ads are performing.
Your lead to close ratio takes the number of leads you’ve converted from your paid ad and divides them by how many you turn into actual customers. This metric mostly will tell you how effective your sales tactics are, but it can also tell you if you’re generating quality leads from your advertising.
This advertising metric is more straightforward than the other metrics we’ve defined so far. The average order value refers to the average price a customer pays for orders that come through your paid advertisements.
The higher the average order value, the more revenue you’re generating. Just make sure you have the ecommerce inventory to keep up!
While most brands use paid advertising to increase their sales in the short-term versus long-term SEO tactics, your paid ads can do more than increase leads today. They can also have a positive effect on how users start to search for your products and services through heightened brand awareness.
Remember that paid advertising is not the only factor in lifting your brand search, but it can be instrumental when used well in the right industry or niche.
Now that you have some of the lingo down, it’s time to log into Google Ads and create your first campaign. The first step is learning how to set up a Google Ads campaign, and once you’ve created it, you can jump back into this article to learn about AdWords reporting.
Google Ads reports have a large amount of features and capabilities within their comprehensive tool, but which are more important for you? We’ll give you a brief breakdown of what you need to know.
If you have an ecommerce business, this metric will be extremely important when running your Ads report. Google Ads allows you to track all of your conversions from your paid advertisements through their ecommerce tracking feature.
All you need to get started is to copy and paste a snippet of code generated from Google Ads and inject it into your dedicated landing page. Google has more information on how to set up ecommerce tracking here.
We’ve mentioned the importance of tracking your conversions but what type of conversion should you optimize your paid ad for?
If your immediate goal is to generate more revenue from product sales to free up your inventory, you’ll want to convert visitors into buyers.
If you’d rather get the user’s email address so you can market products to them for the long-term (which we recommend), you’d focus on converting visitors into email subscribers.
Depending on the goal of your Google Ads campaign, you can decide on a conversion metric that fits your paid acquisition strategy. Once you have that in mind, keep an eye on how well your paid ad is converting through the Google Ads platform.
One of the benefits of utilizing Google Ads is that you can store historical data from your paid ad campaigns over the next few months or even years. It’s easier to see trends in how users are searching and interacting with your advertisements when you have access to historical data.
Instead of deleting your Google Ads campaign after you’ve shifted your attention to focus on another paid ad goal, you can keep a log of your paid ad performance over time through the platform. When history repeats itself, you’ll be ready and armed with knowledge to help you increase conversions in the future.
What if you want to track the conversions of non-Google Ads campaigns? You can still do this within their platform by importing your cost data. This can include data from social media advertising, email marketing campaigns, and non-Google search engine ads. You can learn more about how to import this cost data here before you start running with your next paid ad campaign.
It doesn’t take long to get started now that you know what conversion-based metrics you are looking for and what your paid advertising priorities are. You can start creating your first Google Ads report in as little as 15 minutes, so there’s no better time than right now to jump in!
Now is your chance to put the final touches on your Google Ads campaign and launch it into the world. But don’t forget to check your Ads report after you put it into action.
What advertising metric has been most beneficial to you while advertising your business with paid acquisition campaigns? Let us know in the comments! We’re interested to hear about your own experience with Google Ads.