Are you running or planning to run a PPC marketing strategy? In order to determine if your marketing strategy has been successful or not, you need to know what to measure. Following we will proceed with explaining the key performance indicators you should be paying attention to and why.
In the end, It all depends on the business strategy you have as well as your business goal but there are certain KPI that everybody should keep in mind when doing PPC in order to measure the marketing efforts we all perform. Because in the end, all our marketing efforts need to be measure so we can later take decisions about it.
Following, you will find a list of seven KPIs for your PPC marketing strategy we believe have to be known and use if you are working on online marketing.
First of all, what is a lead? a lead is a all those contacts generated from consumers interested on our service or product. Mostly, leads aim to turn into sales or into an active the organization can use in a near future. Therefore, the more leads we have the more opportunities towards sales or towards increasing revenue right? Leads are our raw material and our aim is to gather as much as we can.
The problem is that, leads do not have the same value, we could say, there are categories of leads. Some are more valuable than others and it all depends on your standards and how you gather them. Lastly, leads have a cost and make sure you know how much a lead costs you.
As for PPC, a lead is every time a user “converts” on your website. Either fill up a questionnaire, or give the telephone number…
Cost per Acquisition or lead (CPA/CPL)
This is how much a lead or a sale costs you. As for PPC, its the total cost / nº conversions or converted clicks. This is a very important metric to keep in mind since no matter how much you are selling, it might be you are losing more money than earning it. Cost per Acquisition tends to be one of those KPI that always need to be the lower possible since the less you pay for a sale/lead, the more you will be gaining in terms of revenue.
Clickthrough rate (CTR)
The clickthrough rate is one of the most important KPI when doing PPC. This will tell us how relevant our keywords are towards our ads. The higher the CTR, the more relevant our ads are. This means the user searching for a specific term, clicks on your ad because you are offering what he is really looking for. That increases your chances to make this user turn into a conversion or a sale. This is why the following metric is of high importance as well:
Landing Page Conversions
So if you are running a PPC campaign, it makes a lot of sense that your landing page performance needs to be measure. What do we measure though? The speed page? The amount of time per visit? The bounce rate? Well, it could be, but the most important metric you should be looking at is the conversion of the landing page. Specially if you do a/b test, you will want to know which landing page performs better in terms of conversions.
Total Conversion value
In the end of the day, we all make marketing because we want something in return, we want revenue, gain money, make our company grow. Just as an advice, sales or revenue are not generated instantly after you create your campaign, specially in online marketing. It all needs a preparation, it all needs time to adjust. So be patience and do not take decisions without letting your marketing strategy gather enough data. The total conversion value can be calculated in two different ways:
- Either you give the same value to each of your conversions (p.e each lead is a revenue of 5€). This you will have to do it manually through the configuration of your conversion goal set up.
- Or with code you take the value of the product and take away the VAT (or not) to calculate your conversion value.
So in the end you will just need to multiply your total amount of conversions per the amount you have assigned to each conversion.
Lifetime Value (LTV)
The lifetime value is all the time period a customer is using our service or our products and how much time it has to pass till they come back to us. The longer the lifetime value, the more revenue we will gain, the shorter the lifetime value the more new clients or users we will need. In simple terms we could figure out our client/customer LTV by measuring:
If it’s a service, the time a customer remains client to us and therefore pays a fee for our services. On the other hand, if it’s just a product, we will need to measure all the times a user buys from us in a period of time or until he/she decides to go to the competition.
In order to calculate the LTV we will need to: Revenue * Gross Margin * nº times of repeat purchase
Return of Investment (ROI)
Finally, the most important of all, the one that will tell you if you are either losing or making money for sure. The Return of investment or ROI. So this one is calculated in a very similar way than the total conversion value but this one takes into consideration not only online marketing cost but also logistics, salaries and all those costs that have occurred to sell the product. By being able to calculate this one you will know for sure how much you are making and decide if you have to invest more or not.
Those have been some of the most important KPI we believe there are. At least, those are the ones we use on our daily basis. Keep in mind, depending on your business goal you might be interested on taking one or another, so take your time to think and plan which KPI are you going to be working with.