Google Ads Metrics: what does CTR, CPC, CPA and other statistics mean?

Posted by Carol Poole on 27/11/19 10:15 AM

If you have been advertising on Google Ads, it's a good idea to understand what the main metrics mean and why there are important.  If you outsource your Google Ads management, understanding them will help you understand your monthly reports better and help you and your Google Ads manager have more insightful conversations.

If you run your own Google Ads account, understanding metrics will also help you make the most of your budget as well as understand how to optimise your campaign better.

What The Metrics Mean and Why They are Important?

Google Ads metrics are simply useful standards of measurement to help you evaluate campaign performance.

The main metrics are:

  • Average Cost Per Click (CPC)
  • Clicks
  • Impressions
  • Click Through Rate (CTR)
  • Cost
  • Conversions & All Conversions
  • Impression Share 

 

Average Cost Per Click (Avg. CPC)

The average cost per click is average amount you have been charged for each clicks. 

This is calculated by dividing the total cost by the total number of clicks. For example, if the cost was $1,000 and you had 200 clicks, the average CPC would be $5.00.

Bear in mind, that the cost per click can vary dramatically between keywords. One keyword might only need a dollar to enter the auction but another keyword might need a $6 bid to display in the one of the top 4 positions in Google. 

While a lower CPC is preferable, if a keyword with the $6 bid is the one that gets the majority of conversions and not the the one with the $1 bid, then looking at CPC alone may not be the best metric to focus on. 

The metrics that you focus on depends on the goals of your campaign. If you goal is to get the most amount of clicks for the lowest cost, then it might be a good metric to look at but if your goal is leads, then it might be better to look at the number of leads and the cost per lead.

Like all metrics, they should be looked at together.

Your max CPC, bidding strategy, historical performance, quality score and landing page impact your ad rank which in turn impacts where your ad appears in search.  If your ad rank is low relative to your competitors, you might need a higher CPC so your ads show in more prominent positions. 

 

Clicks

This is simply a metric that counts the number the of times your ad has been clicked on.

It will often take several clicks before you receive an enquiry or sale. You can easily forecast how many sales or leads you expect to receive by knowing your conversion rate. If you have goals set up in Google analytics, you can see your conversion rate. 

By way of a benchmark, the average conversion rate for most websites is 2%. This can vary significantly between websites. However, if we use 2% as a benchmark, it means you would need 100 clicks before you got 2 leads or sales.

 

Impressions

Impressions simply indicate the number of times your ad was shown in the search results. It doesn't mean that your ad was clicked on - it just means that the ad appeared. 

Some people focus on this metric but in most cases, it is not a great metric to focus on. It's important to be aware that a number of things can influence impressions.

If you notice a sudden drop in impressions, it might be because ads on the display network or search partners network are paused or less budget is allocated towards display. You can understand if impressions on search are a concern by segmenting the data by network.

Impressions are not usually not a metric to focus on unless you goal is specifically related to brand awareness. 

 

Click Through Rate (CTR)

CTR is a key measure as to the health of your campaigns, ad groups and even keywords. CTR is calculated by dividing the number of clicks by the number of impressions and is expressed as a percentage. 

For example, if an ad is clicked on 25 times after being shown 100 times, then the CTR is 25% (25/100). If another ad is clicked on 3 times after being shown 100 times, the CTR is 3% (3/100).

A CTR can be used as a measure to evaluate how well structured a campaign is. A high CTR indicates a better structured campaign. In general, a CTR above 2% is considered good for a search campaign but some ads have much higher CTRs. 

Be aware in looking at averages. Some accounts have a combination of search and display campaigns and so sometimes if your 

Cost

Cost is simply a measure of how much money has been spent on Google advertising over a given time period. 

Most campaigns are assigned a daily budget and your ad spend is generally the daily budget times 30.4 (30.4 being the average number of days in a month).

Conversions

Conversions are simply the number of leads, sales or telephone calls your business gets.

Conversions can be broken down in Macro Conversions (what we call conversions) or Micro Conversions. Macro conversions are the main goals you want such as telephone calls or ecommerce sales, whereas micro conversions might be things like ebook or whitepaper downloads or even newsletter signups. These might eventually lead to a macro conversion.

Micro conversions generally sit in the All conversions metrics which is basically a metric that measure the total sum of micro and macro conversions.

Be aware that some agencies measure views of a page as a conversions or clicks on telephone links as a conversion. Page views don't generally lead to sales (unless you are a news publisher selling advertising space) and are therefore not always the best thing to measure as a conversion. As a result, depending on your goals, they might be better off being measured as an All conversion rather than a conversion.

 

Cost Per Conversion / Cost Per Acquisition (CPA)

The cost per conversion is metric that indicates how much it has cost you to acquire a lead or a sale. It is calculated by dividing the total cost by the total number of conversions.

For example, if your total advertising spend (or cost) was $1,000 and you got 20 leads or sales, then your cost per acquisition was $50 per lead. 

 

Conversion Rate 

The conversion rate is basically a calculation that indicates how well your campaign performs in converting users to buyers. It is calculated by dividing the number of conversions by the number of clicks. If you had 5 conversions and 100 clicks, you conversion rate would be 5/100 giving you a conversion rate of 5%.

The average website has an average conversion rate of only 2% so if you are getting a higher conversion rate of 5% you are probably doing better than average. It should be noted, that improving your website might help improve your conversion rate. So it's important to not just focus on the campaign, but also your landing page. 

 

Impression Share 

Impression Share is metric that is often not reported on but it is a key metric that many Google Ads Agencies will review.  Impression share is the number of impressions you have received divided by the estimated number of impressions that Google believe you were eligible to receive. 
There are two main things that impact impression share: budget and bids. If your budget is constrained you ads will not show all the time. This is also true for bids. If your bids are not high enough, then your ads will also not show all the time. In both case, they will only show a percent of time.

Impression share for bids and budget are related, if you increase bids, it is very likely your ads will still be constrained by budget. The solution may be to simply increase your budget.

But what happens if you can't increase budget? In this case, you are probably better off reducing bids so your ads show more often. Conversely, a lower bid might also impact the number of conversions. 

 

Where to view Google Ads Metrics?

You can find different metrics in Google Ads under campaigns.  If you can't see the metrics you are looking for then you can click on the columns section and add the metrics in.

metrics

Why you should monitor these Metrics?

When looking at metrics, it's important to understand that many of the metrics are interrelated. A change in one metric may impact other metrics. 

For example, if you reduce a bid then your CPC might go down but it is also likely that your impression share, CTR and CPA might also go down. It might also might mean that the number of conversions you receive also decrease.  This is because your bids impact your ad position and how often your ads appear. Less clicks might mean less opportunity for a conversion.

You can compare your changes by comparing the time period after you made the change with the same time period before you made the change.

However, beware about looking at averages. If you change some settings to include search partners or Google Display, this will increase your impressions but reduce your CTR and even potentially your CPC.

 

Summary

The metrics that you measure will vary depending on what your overall objectives are. However, a well structured campaign should:

  • Have a CTR on the search network above 2% 
  • Meet your your advertising budget
  • Generate good quality leads
  • Have conversion tracking in place 
  • Deliver a good return on investment when compared with other advertising channels. 

Need help managing your Google Ads campaigns? Want to discuss your options?

We'd love to work with you to achieve your goals and make the most of the opportunities that Google Ads can offer.

CONTACT US

 

Topics: PPC & AdWords

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