by Solaa
5 replies
  • PPC/SEM
  • |
Hi guys,

This might seem like a stupid question but can someone please explain the metrics in adwords in layman English and how to determine successful performance so as to optimize. It all get confusing when numbers are involved. For example does a high CTR means the ad is successful?
CTR
Conversion
Cost per conversion
conversion rate
ROI
ROAS
#metrics
Avatar of Unregistered
  • The idea of advertising is to get as many people to come to your store. The more you have, the more you should sell, all else being equal. So CTR is important. No advertiser in their right mind would say they want a lower CTR on well-targeted ads.


    You must keep in mind however that there is noise involved. Absolute CTR is affected by your ad's position and position in turn is affected by your bid. You can't just say that x% is good or bad, even taking position into context. The equalizer is Quality Score. CTR is the main ingredient of QS but removes all that noise.


    So CTR is important - relative CTR that is so pay attention to that QS - and one thing to strive to improve. Google cares about it and so should you.


    But there's another side that you should care about too and that's conversion rate. A high CTR means little if you don't convert, you're just spending money. A high conversion rate will result in lower cost per conversion and higher ROI (more revenues per advertising dollar spent).


    Therefore, you want the most sales per impression: high CTR combined with high conversion rate. In other words, you want the highest of the product of CTR and conversion rate. CTR*CV rates of 10*2 is better than 15*1.


    For most, conversion rates are fairly stable. Ads have some effect but the landing page has more to do with conversions than ads. That's why you should not ignore improving your page to get more conversions.
    {{ DiscussionBoard.errors[11229946].message }}
    • Profile picture of the author Solaa
      Hi Lucid,

      Thanks, this is really helpful. Will put al you have said into consideration and hopefully it all becomes easy in the long run
      {{ DiscussionBoard.errors[11230251].message }}
  • Profile picture of the author dburk
    Hi Solaa,

    Metrics, numbers, data... none of it has meaning until you apply a specific and meaningful context for examining those metrics. What you are experiencing is quite common for most new advertisers and there is generally a single common root cause.

    Data Has No Meaning In The Absence Of A Goal

    What you need is a bit of structure and purpose to bring meaning and relevance to those metrics. In fact most metrics are only useful as a reference point to diagnose issues with your account. However, there are a few "key" metrics that will have extreme importance that you must select and monitor carefully for healthy campaign performance.

    Key metrics are not the same for every type of campaign, and you don't pick them arbitrarily. Before you can select a metric that could be truly meaningful to your business objective you first must chose a smart goal for your campaign. It is not until you define your primary campaign objective, and specific goal, that you will be able to select the key metrics that can tell you if your campaign strategy and optimization methods are moving away from, or towards your goal.

    Be The Captain Of Your Campaign

    To use a metaphor, think of your campaign as a sea voyage, your are the captain of your ship (campaign) and your destination port is your campaign goal. Without a goal, you have no clear idea which direction you need to sail, you won't know whether winds and currents are helping, or hindering, your voyage. The absence of a goal renders your data useless.

    Once you set that specific port of call as your goal, suddenly all those metrics, compass direction, wind speed, prevailing currents, and other conditions all have meaning. It becomes clear if they are aiding or hindering your voyage.

    Just as having a specific destination port selected, and a course charted, setting a specific campaign goal, selecting and implementing a strategy and then sailing towards that goal you will begin to see your metrics as very meaningful and useful within a context of a specific goal. Without that goal, it's just meaningless data.

    Set a specific goal for your campaign and plan a strategy to reach that goal. then select the key metric, or metrics, that tell you how quickly you are approaching that specific goal, that metric is your primary metric, your key metric, pay very close attention to that. Optimize your campaign performance based on that key metric.

    Other metrics may be useful in helping you understand why something is happening, but your key metric is telling you what is happening that is most meaningful to your goal.

    The Best Goal Is Always Based On Real Value

    A good campaign goal is never based on a ratio, or a percentage, those types of metrics are purely diagnostic in nature. A good goal is something that has bankable value.

    Can you deposit a high CTR, or ROAS percentage, or any other metric into a bank account?

    No.

    A good goal is based on things like sales growth, total profits, or increases in assets. Those are they kinds of things that increase the value of your business. Other types of metrics, especially percentages and ratios are merely diagnostic metrics to help you understand what has changed and why, they are secondary to your primary key metrics, which are value based.

    Set a goal based on real value, identify the metrics that directly measure progress toward that specific goal and pick those as you key metric. Those metrics will have clear meaning to you, and like magic, the fog will be lifted and conditions for your voyage will be clear sailing.

    HTH,

    Don Burk
    {{ DiscussionBoard.errors[11229988].message }}
    • Profile picture of the author Solaa
      Hey Dburk,

      Quite a piece but definitely informative. Thanks a lot.

      Fingers crossed till when the fog will be lifted.
      {{ DiscussionBoard.errors[11230263].message }}
  • Profile picture of the author salman javed
    Hi Shola,

    In layman terms everything depends upon Ad Rank & it can be determined by two factors a) quality score b) Bid
    a) Quality score is given by Google basis 3 important factors
    1) CTR 2) Ad relevance 3)Landing Page Quality
    Not just higher CTR, but also check how relevant your AD,Keywords, Website is along with Landing Page Quality

    all the above makes it a Successful Ad.
    {{ DiscussionBoard.errors[11230095].message }}
Avatar of Unregistered

Trending Topics