The 8 Key Metrics That Define Your AdWords Performance. A WordStream Guide

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1 The 8 Key Metrics That Define Your AdWords Performance A WordStream Guide

2 The 8 Key Metrics That Define Your Adwords Performance WordStream Customer Success As anyone who has ever managed a Google AdWords or web analytics account knows, there are dozens if not hundreds of numbers to track when analyzing your search marketing performance. Information is good, but information overload is paralyzing, so it s important to home in on the metrics that provide the most insight into your performance. We believe that there are eight key metrics that provide an excellent overview of the performance of an AdWords account and that s why we included these metrics in our free AdWords Performance Grader reports. There s always more data to dig into, but if you want a quick overview of the areas that most deserve your attention, these eight metrics will get you there. Below you ll find a quick explanation of each AdWords metric and why it s important. 1. Wasted Spend Wasted spend is a crucial metric because it has such a big impact on your overall return on investment (ROI) you can t expect high profits from PPC if you re not keeping your costs down. Wasted spend is a crucial metric because it has such a big impact on your overall return on investment (ROI) you can t expect high profits from PPC if you re not keeping your costs down. By watching out for wasted budget, you re making sure that your advertising dollars are well spent. The best way to reduce your wasted spend is through smart use of negative keywords. We calculate your wasted spend by tracking the number of negative keywords you ve added to your AdWords account in the last 90 days and then projecting how much additional money you could save by adding more negative keywords every month. We also compare the number of negative keywords you ve added to your account in the recent past to your competitors average. A low relative score for this metric means that other accounts in your monthly spend range are making better use of negative keywords than you. Negative keywords allow you to filter out traffic that is irrelevant to your business and unlikely to convert. By creating a negative keyword, you re preventing your ads from displaying against search queries that contain that keyword. By adding negative keywords on an ongoing basis, you re better managing your PPC spend. Bidding on non-converting keywords is a waste of your marketing budget.

3 2. Quality Score Quality Score is Google s measure of the relevance of your keywords, used to ensure that searchers see relevant ads and have a positive experience. The factors that determine your Quality Score include: The click-through rate (CTR) of the keyword and matched ad The relevance of the keyword and ad to the search query The relevance of the keyword to its ad group The CTR of the display URLs in the ad group The quality of your landing page It s important to maintain good Quality Scores because Google uses them to determine your ad rankings as well as how much you pay per click. (For a more in-depth look at the nuances of Quality Score, check out our free Quality Score Toolkit.) The AdWords Performance Grader measures your average Quality Score on an impressionweighted basis (meaning keywords with more impressions are given more weight, so you have a truer picture of how well your account is doing). The report also plots your Quality Score distribution against the recommended curve. 3. Click-Through Rate Click-through rate, or CTR, is one of the major components of Quality Score. It s calculated by taking the ratio of ad clicks to the total number of ad impressions. For example, if your ad gets one click for every 100 impressions, that s a 1% CTR.

4 There are several reasons why it s important to strive for a high CTR including: A high ratio of clicks to impressions is an indication that your ads are relevant and effective that is, that you re targeting the right audience with your keywords and ad text, and searchers are responding by clicking through to your site. Improving your CTR will go a long way toward improving your Quality Score which, you may recall from the last section, has positive benefits on both your ad rankings and your CPA. Your free AdWords Performance Grader report tells you how your click-through rates measure up to those of your competitors. You ll also see a graph plotting your CTR versus ad position on your most searched keywords. 4. Impression Share Impression share is a measure of how often your ads are appearing for searches that are relevant to your ads in other words, it s a ratio of your ad impressions to the total number of searches for which your ad was eligible to appear. If your ads displayed for half of relevant searches, you d have an impression share of 50%. A low impression share means that something is going wrong in your campaign. Your budget may be too low, or low relevance and Quality Scores could be causing you to lose out on potential opportunities to appear to qualified searchers. The AdWords Performance Grader shows you your budget-weighted impression share, meaning keywords to which you ve designated more of your budget figure more heavily into the equation. You ll be able to see your acquired impression share as well as impression share lost to budget and lost to ad rank. Improving your impression share will increase your traffic and lead flow.

5 5. Account Activity It s crucial to spend time actively working in your AdWords account on a regular basis in order to maintain gains you ve made in the past and tackle new opportunities for growth and cost savings. We measure account activity because it s crucial to spend time actively working in your AdWords account on a regular basis in order to maintain gains you ve made in the past and tackle new opportunities for growth and cost savings. If you let your accounts coast, without logging in to check your campaigns, you won t be able to put out any fires that arise much less add new keywords, test new ads and perform other optimizations as needed. That s why we check to see how frequently you have made changes to your account in the past 30 to 90 days. Key areas that we check for updates include campaigns, keywords, ad groups, ad text and placements. 6. Long-Tail Keyword Optimization Long-tail keywords are longer, more specific keyword phrases, usually containing three or more words. Contrast this with head terms, which contain one or two words and are much more general, high-volume and competitive. For example, in the transportation vertical, used cars and Jeep would both be considered head terms extremely competitive keywords that are very difficult to rank on. An example of a long-tail keyword in this vertical would be used 2005 jeep wrangler. Long-tail keywords have low to medium search volume individually, but overall, long-tail keywords account for most of search engine traffic. By leveraging long-tail keywords in your PPC campaigns, you can achieve higher ROI, since long-tail keywords are less competitive and therefore less costly. In addition, because long-tail keywords reveal more intent, you can infer more about the searchers, and they are often later in the buying cycle and more likely to convert. To determine whether or not you re making good use of long-tail keywords in your AdWords account, we look at what percentage of your impressions stem from 1-word keywords, 2-word keywords and keywords with 3+ words. Adding more long-tail keywords to your campaigns usually increases click-through rates and conversion rates while lowering costs. 7. Text Ad Optimization What does it mean to optimize your text ads? Specific, targeted ads tend to get better rankings and higher click-through rates. So it s important to write a unique ad for each keyword. In fact, you should be testing multiple ads by running them at the same time to see which version performs best, in terms of CTR and conversions. By continually testing and tweaking your ads over time, you ll be able to increase clicks and lead volume over time while improving Quality Scores and driving down costs.

6 The AdWords Performance Grader looks at your total number of active text ads as well as the number of text ads you ve written per ad group, and compares these figures to similar advertisers. If you have fewer text ads per ad group than the average AdWords user, your results may be suffering. Your free report also provides a quick overview of your best and worst performing ads in terms of impressions, clicks, CTR, and average position. 8. Landing Page Optimization Landing pages, similar to text ads, need to be very targeted and specific in order to perform well. A well-crafted landing page is a key element of the PPC equation; this is where you convert clicks into sales. Without effective landing pages, your ROI will suffer. Features of a strong landing page include: Clear relevance to the keyword, the ad and the ad group Concise copy and a clean visual layout A clear call to action A well-designed form that leads the visitor to take the next step Generic or poorly designed landing pages can harm your Quality Score as well as your conversion rates, so it s important to create specific landing pages for each ad group and test various elements (such as button design, form length and call to action) in order to optimize conversion rates. The AdWords Performance Grader looks at your total number of active landing pages and compares this figure to the average for accounts with similar budgets. You ll also get a snapshot of your best and worst landing pages in terms of clicks, conversions, CPA and other metrics. Additional PPC Best Practices There are a few more best practices that every PPC marketer should be adhering to, so the AdWords Performance Grader checks to see if you re following these guidelines. These best practices include making optimal use of: Network targeting Geo targeting Language targeting Conversion tracking

7 Ad testing The modified broad match type Negative keywords Ad extensions We believe that these are the core metrics every AdWords advertiser should be paying attention to and striving to optimize in order to get the best results at the lowest costs. When was the last time you ran a report on these all-important metrics? About WordStream WordStream Inc. is a provider of software and services that help search marketers maximize the performance of their PPC and SEO campaigns, driving traffic, leads, and sales for lower costs. The company s easy-to-use PPC management software facilitates more effective paid search campaigns by increasing relevance and Quality Scores in Google AdWords, automating proven best practices, and delivering expert-level results in a fraction of the time. WordStream also offers a best-in-class Keyword Research Suite for finding and organizing targeted, profitable keywords for use in paid and organic search initiatives. In addition, WordStream provides full-service PPC management and other value-added services to help advertisers who are new to AdWords or strapped for time get stellar results from pay-per-click marketing. Learn more at