Paid Search Performance Metrics Explained

With so many different metrics being reported, however, it can be difficult to know which ones are important and which ones are just noise.

Published On: February 11, 20224 min readCategories: Blog, SEM

In this ever more digital age we find ourselves in, Google’s Search Engine is an immensely powerful tool for marketers. It helps them get their brands in front of the right people at the right time. With so many different metrics being reported, however, it can be difficult to know which ones are important and which ones are just noise.

This article breaks down some of the most important paid search performance metrics and provides advice and guidance on how to interpret them. Whether you’re an experienced PPC specialist or new to paid search, this article breaks down everything you need to know about these important metrics. It takes a deep dive into what they actually mean and how you can use them to optimize your Paid Search campaigns for success.

Basic Building Blocks of any Account:

Google Ads loves to overload its users with seemingly limitless metrics. But making sense of what these metrics mean towards your account health can feel daunting when there are so many options at your fingertips. Let’s start with the basic building blocks of any account:

Clicks: User clicks on your ad units. 

Impressions: Users who saw your ads.

Cost: How much you spent.

Conversions: Your results.

CTR (Click-Through-Rate): Clicks divided by impressions

Avg CPC (Average Cost Per Click): Cost divided by clicks

CPA/Cost Per Conv. : Cost divided by Conversions

These metrics are fairly straight forward but when you start blending them, you’ll start seeing some interesting data.

User Engagement Identifier

Starting with CTR, this metric can be leveraged to infer user interactivity with your ads. The more relevant & engaging your copy, the higher you can expect this number to be. Typically an average ad will produce Paid Search CTRs of 2% – so anything greater than 2% can be considered great. Though this rule will change from industry to industry. 

A Digital Marketing Canary

Avg CPC can be leveraged to identify how competitive your space currently is. Typically you’ll see higher costs per click in industries that generate smaller search volumes but have ample advertisers. What’s important here is to monitor any shifts in your Avg CPC. Increasing or decreasing CPCs can be indicative of seasonality, shifting landscapes, or competition – While it’ll take more legwork to narrow down what’s impacting your Avg CPC, it can serve as an early indicator for change.

Efficiency Driver

CPA can be viewed as how efficient your campaigns are currently running. The lower your CPA, the higher the efficiency. This can point you in the right direction when you’re wondering where your dollars should be assigned – always find & fund your higher efficiency campaigns first! Though be warned – like all good things, you will start encountering diminishing returns before long, so be sure to keep your campaigns balanced!

A person evaluating Paid Search Performance Metrics.

Putting This All Together

Combining this knowledge will allow you to expertly navigate the paid search space. Reading between the lines, you’ll be able to infer data that would otherwise be lost!

A few examples of what this looks like:

My CPA has suddenly increased, my CTR has remained the same but my Avg CPC has increased. 

This likely indicates an increase in competition! Look at your auction insights to see if any new competitors have entered your landscape or if old competitors are ramping up their efforts.

My CPA has improved, but my CTR & Avg CPCs have dropped.

You’re shifting gears from a high CPC & engaged user-base to one that’s slightly less engaged. However, the net-outcome has been an improvement in leads as you start playing the numbers game!

CPA has remained flat but CTR has increased & Avg CPCs have dropped.

Users are becoming more engaged with your offerings (either due to seasonality or new messaging) however the lack of increased conversions likely means that they’re more likely in an investigative mood, building upon this now will likely yield results later. 

Final thoughts

As Paid Search Marketers, performance metrics are some of the most valuable tools we have to evaluate the success of our Search Ad campaigns. These Metrics give you an understanding of how tactics were used and what adjustments need to be made to set you up for future success. Making sense of these metrics gives you a chance to react quickly to an ever-changing marketplace. Deciphering all these Paid Search Performance metrics can seem like an overwhelming task if you have to do it on your own. NAV43 is a Digital Marketing Agency that specializes in developing, implementing and evaluating Paid Search Marketing campaigns. Give us a call today. We can’t wait to get started getting your results.