Over the 18 years I’ve managed PPC clients, I’ve found that few things make my job harder than when clients latch onto key performance indicators (KPIs) that don’t really matter. (Another is the lack of clear, realistic goals, but that’s a post for another day.)
So what are KPIs, which ones matter in paid advertising, and how do you use them?
What Are KPIs?
Metrics that help you gauge how a campaign is performing are known as KPIs. It’s what you use to determine if performance is moving in the right direction or if it’s time to bail out and use the money somewhere else.
The amount of data you could track as KPIs is staggering. There’s impressions, clicks, click through rate (CTR), conversions, cost per acquisition (CPA), revenue, return on ad spend (ROAS), profit, and many more.
Which metrics you choose as KPIs depends on the goal of an account or individual campaign.
Which KPIs Matter in PPC:
Not all KPIs are created equal.
If your campaign goal is branding, your KPIs will probably be impressions and clicks.
If you rely on lead generation, your most important KPIs are probably the number of conversions you are getting and what those conversions cost to acquire (the CPA).
An ecommerce company will probably be looking at the number of orders, plus the revenue and, more importantly, the ROAS.
Let’s get even more complex now.
What if you know the life-time value of your customers? You may be willing to sacrifice the cost effectiveness of your first transaction with a customer because you know how long the relationship will last, how frequently they’ll purchase, and how much they’ll spend on average. In this scenario, an ecommerce company will probably look at CPA as a KPI.
Throughout these examples, I’ve used the word “probably.” Why?
Because none of these KPIs should be the sole measure of the performance of your campaign or account.
We live in a cross-device, micro-moment world. Long, long gone are the days when you could attribute a click to conversion. Now we’ve got people who might visit your site multiple times over many days on three or more different devices, driven by multiple channels, before converting.
Think about this: have you ever been marketed to on Facebook, checked the product or company out by Googling it, and ultimately bought it on Amazon? Yeah, I thought so.
The time from impression to conversion is another important element to consider. I’ve got several clients whose average time to conversion is 28 days. That’s their average. For an ecommerce client, that means I can’t look at a small, recent window of time to see how a campaign is actually performing. One of those client’s monthly revenue will increase by an average of 64% once their cookie is locked at 90 days, compared to the value reported a few days after the end of the month. That’s an incredible amount of change that affects the ROAS metric, based solely on the date you collect the data. Just imagine: You could be making decisions based on an incomplete picture.
So What Does This All Mean?
The point is this: Think hard about your KPIs. What are your goals and what data can you use — and when — to evaluate campaign performance?
But don’t lose sight of the bigger picture, which is how all of your marketing channels work together. Your Google campaigns affect your Amazon sales. I’ve seen immediate sales drops in Amazon when companies pause their Google Ads. Your Google and Microsoft campaigns feed your Facebook remarketing. Your paid search traffic might feed your email-nurturing campaign. And every channel’s performance impacts your bottom-line results.
If you judge the performance of your paid advertising accounts solely on the revenue or leads they drive, you’ll hinder your ability to grow your business as a whole.
Don’t get tunnel vision. Use your paid advertising KPIs in conjunction with your other marketing KPIs to work toward greater success for the whole.