In my years as a marketing consultant, one common hurdle I often encounter with new clients is the inability to define or select the correct Key Performance Indicators (KPIs) for their PPC project. Choosing the right KPIs isn’t just a theoretical exercise; it will make or break your digital marketing efforts. Discuss all the metrics in detail with the client while discussing their short term and long-term needs. What exactly are they trying to achieve – is it an increase in conversions, brand awareness, increase in traffic only, geographical expansion, Improve ROAS, Retention? Once you establish their immediate need, review the metrics and establish clear KPIs.
Vanity Metrics Vs. Core KPIs
While focusing on ‘vanity metrics’ like Click-Through Rate (CTR), it’s crucial to understand that these can be manipulated and don’t always correlate with real business outcomes. Clearly discuss the metrics the client monitors and what they need to see as measurable results. If they’re focused on increasing CTR, is Ad Copy an issue? Are they looking beyond the average and looking at specific segments and comparing brand vs. nonbrand, Generic vs. Conquesting campaigns, search vs. display? CTR could be affected and manipulated by the campaign types, the KW match types, types and quality of the ads. Other clients may be overly focused on Quality Score (QS) thinking that an improvement there will result in miracles. It’s important not to become too fixated on “nice-to-have” metrics, that may not affect the bottom line.
Focusing on the Right KPIs
From my standpoint, there are some key metrics that generally transcend all other considerations:
- Conversion rate (CVR): This is the effectiveness of the campaign in converting clicks into desired actions. If the Ad is effective in getting the clicks at a good CTR, then the landing page should convert the clicks. The messaging and offer has to be aligned with the ad. Improve the landing pages to improve the CVR. A/B Test the ads to improve the CTR or improve relevance to LP and result in increased CVR.
- Cost per Conversion (CPA): This highlights how cost-effective the campaign is in converting. The goal would be to lower the CPAs. By improving your CTR and CVR you can effectively lower your CPA.
- Return on Ad Spend (ROAS): This is the campaign profitability. Ensure a realistic goal. ROAS can improve as you’re optimizing for better ads and increasing CTR also increasing your Ad rank. Try to increase your Average Order Value by upselling and bundling on the landing pages. Increasing the AOV can result in more revenue per conversion and can improve ROAS even if the CPA stays the same.
Educating the Client
Part of the project is not just to implement, but also to educate. You may be in a situation where you have increased traffic by scaling with broad, you are driving more conversions overall at a comparable CPA or ROAS. You may think you’re doing great. However, the client is concerned your CTR and CVR has dropped. Clearly communicating the types of campaigns you are launching and how they will affect average metrics is crucial to ensure the client understands what you are trying to accomplish. Only then can the client see that the increase in conversions outweighs any of the perceived temporary (or new reality) drops in certain metrics.
In conclusion, the KPIs are not just metrics, but reflections of the business strategy. Understanding how to select the correct KPIs based on the client objectives is crucial. Invest the time up front to discuss this with you clients to get these right. It will save you time, money and headaches in the long run.