What Are The Metrics That Really Matter?
Article — Does your agency have a laser-focus on the metrics that really matter? Metrics in terms of revenue, sales, and enquiries, not ‘distraction metrics’ that really mean nothing to the business' bottom line?
Posted by Tony Sambell
01.07.2023
Making sure our clients understand the results of their campaigns is really important to me. I am constantly amazed at the unethical practices that exist out there; clients who come to me from other agencies who either haven’t been provided performance reports at all or who have been provided vanity ‘distraction’ metrics like Impressions and Clicks with little or no relevance to the bottom line.
Reporting plays a central role in driving success and achieving marketing objectives. It serves as the compass that guides business owners and marketing managers toward making informed decisions, optimising strategies, and proving or demonstrating the value of marketing investments. By understanding the key metrics in the reporting, you can adapt to changes, create impactful campaigns, and resonate better with your target audience.
And, you can better understand the impact on your revenue line.
We meet regularly to discuss ways to continually raise the bar, decode and translate the data into understandable results, and deliver meaningful metrics that actually matter to our clients. At our recent Internal Reporting Workshop, our PPC team and I put together the top 5 Google Ads key metrics that we agree are the most important and that matter the most to our clients.
And, depending on specific campaign objectives, these are the baseline metrics that we report to our Google Ads (PPC) clients regularly:
💰 Return on Ad Spend (ROAS):
Return on Ad Spend (ROAS) is a metric that calculates the revenue generated for every dollar spent on advertising. It measures the effectiveness of your ad campaigns in driving revenue and is particularly crucial for e-commerce businesses.
Why is it important for campaign strategies?
ROAS directly relates to your campaign's profitability. A ROAS of 1 means you are breaking even, while anything above 1 indicates profitability. A ROAS below 1 means your ad spend is exceeding revenue generated, which requires immediate attention. Optimising campaigns based on ROAS data, can help to minimise wasteful spending.
This is a simple equation for e-commerce businesses, and it can be applied to non-e-commerce businesses by identifying the revenue brought in by your ad campaign and dividing that by the cost of the campaign.
📈 Conversion Rate (CVR):
Before I go into anything relating to Conversions, it's important to understand what Conversions are. If you’re an e-commerce business with an online store, your conversions are product sales. If you’re not an e-commerce business with an online store, a ‘Conversion’ in Google-lingo is actually what we refer to as a lead - this can be by way of form submission, click-to-call, or email click.
Conversion Rate (CVR) measures the percentage of users who complete a desired action, such as making a purchase, filling out a form, or signing up for a newsletter, after clicking on your ad. It is a critical metric for assessing the effectiveness of your landing page and overall campaign strategy.
Why is it important for campaign strategies?
CVR directly ties campaign success to your business objectives. A high CVR indicates that your landing page and user experience are compelling and relevant, leading to increased conversions (or leads). On the other hand, a low CVR might indicate that your landing page needs optimisation or that you need to refine your targeting to attract more qualified leads. By monitoring the CVR, you can identify pain points in your conversion funnel and apply tactical improvements to boost your ROI.
Making sure you understand these metrics by providing results in a logical and easy-to-digest way is something that we recognise as a critical deliverable for our clients.
💵 Cost per Conversion (CPC):
Cost per Conversion (CPC) measures the average amount you spend on Google Ads to acquire a single conversion. This metric helps you understand the cost-effectiveness of your campaigns and is crucial in managing your budget efficiently.
Why is it important for campaign strategies?
CPC directly impacts your advertising budget and profitability. A high CPC might be acceptable for high-value conversions, but it can become unsustainable if not managed properly. Monitoring CPC allows you to identify keywords or ad groups that are driving up costs without delivering worthy results.
💎 Quality Score:
Google's Quality Score measures the relevance of your keywords, ad copy, and landing page to the search queries. It is scored on a scale of 1 to 10, with 10 being the highest. A higher Quality Score generally leads to better ad rankings and lower costs.
Why is it important for campaign strategies?
Google rewards High-Quality Score ads with better ad positions and lower costs per click.
👆 Click-Through Rate (CTR):
Click-Through Rate (CTR) is a fundamental metric in Google Ads, as it directly reflects the relevance of your ad to your target audience. It is calculated as the percentage of users who click on your ad after seeing it. A high CTR indicates that your ad is resonating well with your audience - the headlines, descriptions, assets are appealing, while a low CTR suggests your ad needs improvement.
Why is it important for campaign strategies?
A high CTR indicates that your ad copy, keywords, and targeting are aligned with user intent, resulting in more traffic to your website. On the other hand, a low CTR can lead to wasted ad spend and reduced ad rankings. You can identify high-performing ads and keywords, enabling you to refine your ad strategy, keyword selection, and audience targeting across other campaigns.
Of course, the goal here is to translate traffic into leads once the audience lands on your website. So this metric ties back into the CVR metric. If the traffic isn’t converting into a lead, then you need to investigate reasons why, like was the landing page relevant, is your pricing competitive, or was there another barrier?
These top 5 key metrics play a vital role in informing campaign strategies and guiding the digital marketing direction, empowering us to make data-driven decisions, strengthen your campaigns, and achieve your business objectives.
Making sure you understand these metrics by providing results in a logical and easy-to-digest way is something that we recognise as a critical deliverable for our clients. It’s the evidence that your investment is paying dividends.
And remember, don’t be distracted by vanity metrics!
