Measuring advertising success
Let’s begin by taking a look at the types of paid advertising methods you should be tracking.
Pay Per Click (PPC)
As with any other marketing initiative, launching a PPC campaign is not an end in itself. You need to devote time to track it’s performance. Let’s dive in to how to measure and analyze its effectiveness to ensure that you’re maximizing your return on investment (ROI).
The metrics we’ll discuss are important, you goals will determine which you should focus on, so let’s think back to your goals, what matters to you the most? These objectives are the primary determinant of your success in PPC.
We’ll be using Google’s PPC advertising program for the examples given here, but the metrics are universal.
The Click-Through Rate (CTR) is one of the most closely monitored metrics by PPC experts. It’s basically a measure of how many people who see your ad and then click on it. You can calculate your CTR by dividing the number of individuals who click on your ad by the number of people who view it (clicks divided by impressions).
A higher CTR means that your target audience has found your ads helpful. This relevancy can help your Quality Score increase. Ads with higher quality scores have a much lower Cost Per Conversion.
If you’re experiencing low click-through rates, it may be a sign that you should look at your keyword selection, your ad copy, and the landing page you’re sending visitors to.
Cost Per Conversion
Cost Per Conversion (CPC) is important in determining how much you have to spend to gain a new client.This is the number that determines whether or not a campaign is successful. If you have to pay more to gain a new customer than that customer is actually worth to your business, then your campaign is failing; you haven’t attained a return on investment.
If your campaign costs more than what you earn from a new lead, then you’re not using your budget wisely. Keep track of your CPC to learn how to improve your campaign. Use the data from this metric to adjust your strategies and reinvest on what works.
The Bounce Rate can show certain aspects of your campaign that need optimization. This metric is measured by the number of visitors who visited your site and left without responding to your call to action.
If your campaign has a high Bounce Rate, it means that you’re targeting too broad an audience, a good number of which are simply not interested in what you’re offering.
The Conversion Rate refers to the number of times a user clicked on your ad and completed a desired action within a certain window of time. Whether it was making a purchase, signing up for a free trial, or filling out some other kind of form. You have to keep in mind that the ultimate goal of any PPC campaign is conversion. By tracking this metric, you’ll be able to gauge if people are buying your product at an ideal rate.
Conversion rate is just as important as click-through rate – you don’t want to pay for tons of clicks and traffic if none of that traffic ends up taking a meaningful action.
Strong conversion rates mean that the money you spend per click is coming back to you in profits. That’s what we call a good ROI.
Last, but certainly not least is Google's Quality Score. Quality Score is the search engine’s measure of the relevance of your keywords. They use it to ensure that searchers see the most relevant ads possible and have a positive experience.
The factors that determine your Quality Score include:
The click-through rate (CTR) of the keyword and its corresponding 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. Even if you think you’ve dotted your i’s and crossed your t’s when it comes to keyword research, campaign structure, and ad text optimization, you should keep a close eye on your Quality Scores.
Low Quality Scores are an indication that you’re missing some piece of the puzzle and you’re going to pay more to help your business grow.
Want a quick way to check your performance for key metrics like these? The AdWords Performance Grader is a free tool that performs an instant PPC audit on your AdWords account, comparing your performance in areas like Quality Score and wasteful spending to other advertisers in the same budget range.
Display Ads (banner ads)
Display ads, also known as banner ads can be great for maximising your potential reach and attracting more qualified leads. Let’s cover how to define performance metrics for your display ads. We’ll judge the success of your display ads in terms of which goals you have set for your campaign.
From leaderboards and half-page sizes to rectangle ads large and small, display advertising relies heavily on creative visuals and bold graphics to get consumers’ attention. Display campaigns have proven themselves rewarding marketing strategies when done effectively.
There are for primary Key Performance Indicators that you need to measure when evaluating your display ad campaign’s success.
Impressions - How many times an ad appears.
Reach - How many people see an ad.
Engagement Rate - How many people interact with an ad.
Click-Through Rate - How many people click on an ad.
Each KPI is important on its own but it’s through their interaction that you get insight on how well your display campaign is performing.
When your ad appears, it creates an impression. Impressions help you quantify how many times an ad appears on a web page. An impression is simply a view. Viewers don’t have to click, hover, or engage with the ad for an impression to occur.
Recording a large number of impressions shows that your ad is reaching a wide audience. More views increases the chances for conversion. But if you find that other KPIs, such as engagement, don’t grow along with your impression rate, you may want to rethink your display campaign strategy. Pay attention to the placement of your ad, when it should be visible, and your target audience to increase your chances of conversion.
If your display ad appeared while I was browsing, it appearance marks as an impression. But its presence also provides another KPI metric: reach. Reach measures how many people see an ad. For display advertising, this KPI quantifies the number of unique views a particular ad receives. A unique view means that a single person viewed your ad once. Having the same person view the same ad twice does not amount to two reaches.
Keeping an eye on reach metrics ensures that you’re not wasting time or money by showing ads to the same person. Again, this may help with brand awareness, but if the wrong person keeps seeing your ad, you may be missing out on the people that matter.
Usually expressed as a percentage, the engagement rate indicates how many people interact with a display ad. This could be a simple action like hovering over an ad, or in the case of rich media, something more complex such as watching an embedded video clip or listening to audio.
Engagement including time spent on your site, or number of pages viewed, is a good indicator of the quality of new traffic to your site. Be sure to compare engagement on a product-by-product basis, too. If your new visitors' bounce rate is high or their site duration is low, you may need to adjust your strategy.
High percentages of engagement strongly correlate with higher conversion rates. If a person expresses interest by playing around with an ad, they might want to learn more about what’s being offered. Having interactive elements in your display campaign can drive up engagement percentages and potentially increase consumer participation in the long run.
Click-Through Rate (CTR)
Basically, CTR lets you see how many people click on your ad after seeing it. Like engagement rates, CTR is recorded in percentages. It’s calculated by taking an ad’s total number of clicks and dividing it by the total number of impressions.