Google Ads can be a very effective and efficient way to advertise. However, when done wrong it can also be wasteful and expensive. To put yourself on the path to success you must know the most important Google Ads metrics. If you understand what to measure, then determining what to optimize is easy.
KPI’s
For the purpose of definition, what we are really talking about are Key Performing Indicators or KPI’s. KPI’s are the metrics that get you to your objective. Metrics themselves are just performance numbers that may or may not indicate progress. As an example, an increase in visits to the Hours and Directions page of a mortgage banker may not translate into more loans. But, for a retailer it may well produce more store traffic.
A common theme in our blogs is the need to determine a clear objective. If you do not know what success looks like it is impossible to measure. For many of our clients it is to increase sales. For some it is to increase awareness or brand lift. A well-defined goal can be measured.
Sales Lift
A lift in sales is the reason we use Google Ads for many of our clients. For an e-commerce business the correlation is easiest to track. Conversion data from Google Ads tied to the website show a direct connection to a sale. The KPI is obvious.
Sales lift for retailers is a bit trickier. With good first-party data in-store sales are trackable back to digital advertising. When first-party data is not available special offers and incentives only provided through Google Ads will demonstrate sales lift. When transactional data is not present examining store traffic and the use of location extensions can be a useful metric. If those numbers increase along with sales the correlation is clear.
A more challenging area to track sales lift is with lead generation. Often times in service industries there is a lag from the time the lead is generated until the sale is completed. Having a good CRM and tying that back to Google Ads allows the marketer to see what is producing new clients and what is not.
Return On Ad Spend
Increase in sales leads to the next KPI, Return on Ad Spend or ROAS. This metric is exactly as it sounds. How much was spent on Google Ads and what it yielded in return. ROAS = $ spent on ads / $ received from ads. To find your ROAS, track all deals and sales and where these customers/leads came from. Compare your ROAS from Google to your other marketing channels.
ROI
Return on Investment or ROI is the ad measurement most people mention. While ROAS just takes into consideration ad spend ROI takes other expenses into consideration. ROI will take into consideration all other fees incurred, costs in people and tools etc. When understanding overall profitability is the goal, use ROI.
Conversions
Conversions are usually the higher-level actions a prospect can take on a website. For an e-comm site conversions are purchases. For a Retailer there are a number of possible conversions. Each one of these steps would indicate an interest making a purchase. A person could download a coupon. A prospect might make an appointment. There is often a correlation between visits to the Hours and Directions page and store traffic. Phone calls are often of value. For some retailers, using Google’s tracking to see if a mobile phone user who visited the website came to the store is very telling. (this is best used by standalone locations)
Businesses in the service industry (Legal, Medical etc) generally rely on two conversion methods, the form-fill and phone calls. People who are concerned about their privacy tend to prefer filling out a form. Others, like the human connection and feel their concerns will be answered faster if they speak with another person. Service businesses that advertise should have a call tracking service. Call tracking can report back exactly how the prospect found the phone number, down to the keyword.
Cost-per-Conversion
Along with conversions we monitor the cost-per-conversion for all Google campaigns. Conversion numbers should correlate to sales. Therefore, lowering the cost for a conversion will stretch ad dollars and yield more conversions. A strategy that lowers conversion costs but does not increase sales is not producing quality leads.
There are numerous other metrics that marketers may find of value. Efficiency metrics such as cost-per-click, CPM, Click-through-rate etc. are not metrics that are automatically optimized. Each has to be examined in the context of how they impact conversions and sales. We have instances where a higher CPC has lowered our cost-per-conversion. Our client got better quality leads, more conversions and more sales.
The Most Important Google Ad Metrics
KPI’s should be reviewed month-to-month and year over year. With good data you then see how optimizations directly impact results. Ultimately, most advertisers use Google Ads to increase revenue. Understanding and improving the most important Google ad metrics almost always improves the bottom line.
