Metrics to pay attention to when measuring the success of your PPC campaigns.

I talked in an earlier post about measuring and tweaking your PPC campaigns, so now I will let you know what metrics are important, and what to do with these metrics in order to improve your campaign.

ROI - ROI, or the return on investment, is the most important measurement of all, unless you are not using your PPC campaign for profit, and only for branding purposes. In order to measure your ROI, you will first need to know a couple of things.

1. What is your conversion, and how much is it worth?
For instance, if you are selling a widget, or many widgets, the amount you receive in profit for a purchase is what you will use for the equation.
2. What is your spend amount?
Spend can be determined in a lot of different ways, such as, total ad spend or the entire budget, total spend for a certain

After you have these metrics, all you need to do is take the total spend minus the profit you made, then divide that total by your spend. Here is an example:

You spend $1000 on a Google AdWords campaign, out of this, you obtain 12 sales, each giving you a profit of $110. So, from this campaign, you made $1,320. You spent $1,000 for the campaign, so your profit is $320 ($1,320-$1,000). The next step is taking your profit and dividing it by your spend ($320/$1000=.32). Your ROI is 30%.

CTR – CTR stands for Click-through-rate. CTRs are important in determining whether or not your creatives that you use for your keywords are effective. CTR is determined simply by taking the number of clicks you receive on your ad creative divided by the number of impressions. For instance, if your ad creative was shown 123 times, and clicked on 3 times, your CTR is 2.4% (3/123=.024).

CTR is important for determining a number of things:

1. If you are using Google AdWords, the higher CTR you have, the lower your cost-per-click becomes
2. How relevant your ad creative is to the keywords and key phrases you are bidding on
3. Whether you need to adjust your bid amount for positioning to achieve a higher CTR

With this said, it is possible to have low CTRs but high conversion rates. This can be the case if the keywords and key phrases you are bidding on are broad, but your ad is very specific, which makes the visitors who click on your ad more targeted.

Conversion Rate - Your conversion rate is also a very important measurement, as you want to constantly analyze and tweak your campaigns to achieve higher and higher conversion rates. The higher your conversion rate, the lower the cost per sale.

Conversion rate is figured by taking the number of sales, or leads, or sign-ups, what ever your conversion goal is, divided by the number of visits to your landing page sent by your PPC campaign.

As an example, if the conversion goal of your PPC campaign is to obtain a lead via a lead form submission, and you receive 105 leads from 2,100 visitors, your conversion rate is 5% (105/2100=.05).

There are many more measurements to be covered in a future post, but get a grasp on these for now, as they are a crucial part of understanding how successful your PPC campaign is.