Google Ads KPIs to Check ROI, Sales, and the State of your Brand
Getting involved in a project’s digital strategy is an exciting and challenging task. Analyzing results and measuring the effectiveness of our actions isn’t always fun, but we must first know that result measurement must be a priority in our companies. If you don’t track the investment you’ve made in Paid Media, it’s impossible to know the profitability that has been achieved (if this profitability has been reached at all). With Google Ads, you can track and measure any metric very easily.
KPIs in Google Ads: measure the brand’s notoriety
KPIs (Key Performance Indicators) are previously determined crucial indicators for your project that you decided when you designed your Google Ads campaigns, based on your priorities. These metrics allow us to interpret the results of an action based on its purpose; although these usually have a quantitative focus on sales, it’s not always like this. Calculating improvements or increases in your brand’s notoriety is equally important and is possible through the network of Google Ads display.
Display ads are one of the most frequently used ads for increasing the reach of a brand, given that these ads are shown in places that are related to keywords that we’ve defined through contextual advertising.
The most used KPIs for display are:
- Impressions: Google Ads impressions are the times that an ad appears on a search engine results page or in any other place on Google’s network. This represents the number of users that have seen your ad and, therefore, the company’s brand.
- CTR (Click Through Rate): This shows the interest or relevance that your ads have to the users to which they are shown. Although there is no way to determine when we’ve obtained a good CTR, it can be compared with the competition’s ads. Even then, the understanding is that the higher the CTR, the better your ad is performing; this can help us understand our users’ commitment to the brand. And what are clicks on Google Ads CTR? It’s the number of times that a user clicks on our ad. The formula to calculate CTR is the following:
CTR = (Number of impressions/Number of clicks) x 100
- Reach: This is the quantity of users that have been exposed to an ad. The greater the reach, the more potential clients that have been exposed to said ad. This covers lots of brand notoriety.
- Frequency: This is the average quantity of times that a user was exposed to an ad during an established period of time. To determine it, Google calculates the estimated frequency through collecting data from a sample group and applying the total of all the impressions.
Indicators to Measure Sales and Conversions
When a potential client realizes the action we want (downloads an ebook, registers for an event, or buys a product), that produces conversion. The main KPIs to measure sales and conversions are the following:
- Cost per conversion: this metric offers you the average cost you’ve spent to obtain this conversion. As we mentioned before, you must previously define a conversion for you in Google Ads: sale, lead, click, download, etc.. If, for example, you’ve invested 100€ in a campaign and achieved five sales (and sales are your goal), the cost per conversion is 20€. You must divide the investment by the number of conversions.
- Conversion rate (CR): the conversion rate of Google Ads is the relation between the number of users that have visited your website and those that realized the action you desire.
Also, there’s an essential concept to learn about the profitability of your ad campaigns through Google Ads, known as ROI (Return on Investment).
The Importance of ROI on Google Ads
When you realize an ad investment, you need to analyze if the invested budget has created a profit. If you are investing more money than you’re spending, you’re wasting resources and you must stop throwing away this money; similarly, you need to know if your ad is providing larger benefits than others to redirect your efforts.
Calculating ROI isn’t complicated and with a simple calculation you can discover your return on investment. It’s a value (percentage) that measures the performance of an investment to evaluate the efficiency of our expenses.
ROI = (obtained benefit - investment)/investment)
To measure the ROI of sales, you need to know:
- What profits you achieved in your publicity campaign
- Costs of your services
- Ad costs
There are many types of campaigns on Google Ads and calculating the ROI for conversions and web traffic is the most complicated part. On many occasions, we don’t learn the exact monetary value of downloading an ebook or filling out a form. How many form contacts convert into potential clients? And how many into real clients?
For these situations, there are formulas that, although they don’t offer concrete ROI data, do allow for campaign measurement, like the CPA (cost per acquisition). This is a way of paying for online ads where the company promoting the ad doesn’t pay when the ad is circulated, but instead once the ad converts into a sale.
CPA = (Cost/conversions)
The CPA indicates how much it costs your company to obtain an action (a sale or a lead, for example) of an user, and is usually used as a form of payment for loyalty programs. We must calculate a specific CPA according to our different publicity strategies: Display, SEM, Social Ads, and more.
Study the different KPIs and the possibilities that Google Ads offers to measure and analyze the results of your investment. It’s the only way you’ll be sure to maximize the benefits of your business and convert your project into a successful and growing one.
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