With increasing awareness about the online marketing methods, more and more web marketers are turning towards PPC marketing as a tool for website promotion and sales generation. The primary reasons why online marketers have inclination towards PPC marketing are:
- The ability to calculate accurate true ROI with the help of the data available
- The ability to see actual figures pertaining to how many people have seen the ad.
- The only form of advertising that lets you associate user behavior with ad placement.
Therefore, every web marketing services provider must know about the basic PPC metrics, which make PPC so commendable for online promotion. The lines below give the major PPC metrics, the functions and purposes of which every PPC marketer should know.
1. Click-through-Rate (CTR):
The details of CTR are:
Calculation- It is calculated by dividing the number of clicks by the number of impressions.
Information it Conveys- The CTR represents the information pertaining to the time the display of an ad takes in leading a user to the website, along with providing information about the ads which are most relevant and stand out in SERP.
Information it Does not Convey- It does not convey information about whether the click caused by your ad was a result of well written ad text or aggressive bidding.
Evaluates- The CTR metric is best used for evaluating the quality of ad text.
Utility- The CTR metric can be best utilized to bring traffic to a new website, or for the websites that want exposure or branding.
2. Cost per Acquisition (CPA):
The details of CPA are:
Calculation- It is calculated by dividing the total spending over total conversions.
Information it Conveys- It provides information about the cost incurred in obtaining a lead, website registration, or sale.
Information it Does not Convey- It does not give information about the nature of the conversions, meaning that whether the conversions are new, or the old customers of the website are reconverting.
Evaluates- It helps in evaluation of the effectiveness of the adopted bidding strategies.
Utility- This metric is useful for website that have low budget, and want to target the most efficient keywords only.
3. Conversion Rate (CVR):
The details of CVR are:
Calculation- It is calculated by dividing the conversions over the total number of clicks.
Information it Conveys- It gives information about the frequency of the ad clicks leading to user action, like, sale, page view, or lead.
Information it Does not Convey- It does not provide information about the mid-low-level ads, which may be leaving the site under-exposed, resulting in decrease in impressions.
Evaluates- Helps in evaluating the quality of purchase funnel and landing pages.
Utility- Helps in brining prospective clients when the sales funnel is long.
4. Average Sale (Avg. Sale):
The details of Avg. Sale are:
Calculation- By dividing total revenue generated over total sales.
Information it Conveys- It conveys information about the keywords that bring most revenue, alongwith the language that attracts customer with higher spending.
Information it Does not Convey- It does not tell you about the expenditure you are making to generate the sales.
Evaluates- Helps in evaluating whether the ad text conveys your message effectively to your audience.
Utility- E-commerce websites can make best use of this metric to calculate their performance.
5. Return on Investment (ROI):
The details of ROI are:
Calculation- By dividing the net revenue over the net spending made in the PPC campaign.
Information it Conveys- It provides you insight about the revenue you are generating in response to the investment you make.
Information it Does not Convey- It does not provide you information about which ratio is most suitable for calculating the ROI.
Evaluates- It helps in getting an insight to all the factors working in a campaign.
Utility- This metric is equally beneficial for all website owners, provided that the it is calculated correctly.
In short, the above mentioned metrics can help you a great deal in assessing the success or failure of your advertising campaign.