How to Understand and Interpret Your Next Google Ads Report
- Written by Starbright’s Google Ads Manager
Receiving a Google Ads report from your digital marketing agency can flood you with dread. Not because of the campaign performance metrics, but because of the sheer amount of information you need to process.
Thankfully, understanding reports boils down to knowing what some of the concepts mean and how the metrics can influence each other. This article covers these two aspects – a glossary of the report terms and how they play off each other.
You can navigate to the relevant sections using the links below:
- Changes in the number of clicks
- Changes in the number of impressions
- Changes in the CPC
- Changes in the CTR
- Changes in the number of conversions
- Changes in the cost per conversion
- Changes in the conversion rate
Definitions of key metrics in Google Ads reports
When someone clicks your ad, it's counted here.
An impression is counted each time your ad is served on Google's ad networks, such as on Google.com, YouTube or other publisher websites and apps. Impressions help you understand how often your ad is being seen.
Click-Through Rate (CTR)
CTR measures how often people click your ad after it's shown to them, which can help you understand the effectiveness of your ad, your selected keywords, or your targeted audiences.
Click through rate is calculated as follows: clicks ÷ impressions x 100
Conversions / Leads
"Conversions" shows the number of conversions you received after ad interactions (such as text ad clicks or video ad views).
Conversion rate (“Conv. rate”) shows how often, on average, an ad interaction leads to a conversion. Its “Conversions” divided by the clicks on your ad x 100.
Cost per conversion (“Cost/conv.”) shows the average cost of a conversion. It’s the cost divided by the conversions.
Average cost-per-click (Avg. CPC) is the amount that you've paid for your ad divided by its total clicks. If your ad receives 2 clicks, one costing R0.20 and one costing R0.40, your average CPC for those clicks is R0.30.
Search Impr. Share
"Search impression share" is the impressions that you’ve received on the Search Network divided by the estimated number of impressions that you were eligible to receive.
Changes in the Number of Clicks
The number of clicks can increase or decrease for the following reasons:
- A change in budget,
- A change in cost per click
Scenario 1: Clicks decrease due to higher CPC
In the below scenario, our total number of clicks decreased because our CPC increased with 12.7% despite a 7.3% increase in the total spend for the period:
Scenario 2: Clicks increase due to lower CPC
In this scenario, our cost per click decreased significantly (59.5%) resulting in (116%) more clicks despite a slight decrease in the total ad spend:
Scenario 3: Clicks and CPC decrease
In the screenshot below, our CPC decreased significantly, but we still saw 18.8% fewer clicks due to a 35.6% decrease in total cost (ad spend):
Factors that influence the number of impressions:
- Changes in click through rate
- Changes in cost per click
- Changes in budget (ads can serve more often)
Scenario 1: Impressions increase due to lower CPC and lower CTR
In the sample below, our Impressions increased despite a lowered ad spend:
This is due to a lower CTR and lower CPC. See CTR Scenario 3 to learn why this combination might happen.
Scenario 2: Impressions increase due to improved campaign performance
In the sample below, our CPC decreased significantly while our total ad spend for the month was also less resulting in an increase in Impressions:
To learn more about Improved CTR’s and lower CPC’s, see CTR Scenario 1.
Scenario 3: Impressions increase due to more budget
In the sample below, the cost per click remained more or less the same, but the total spend increased, resulting in more impressions:
Changes to your cost per click can be influenced by the following elements:
- Changes in your ads’ average position
- Changes in your Quality Score
- More competition on your selected keywords
Scenario 1: Changes in your CPC due to your ads’ average position
In the sample below, the CPC decreased significantly, while the CTR remained relatively the same:
Though this might not always be the case, we reviewed our Ads and top Impression Share % and confirmed that it was a lower average position that resulted in the decrease in CPC.
The flip side of these metrics can also be assumed – if the cost per click increases noticeably (more than 10%), but the click through rate remains relatively the same (less than 5% change), your ads’ average position increases significantly.
Scenario 2: Changes in your Quality Score
In the scenario below, the average CPC decreased with 15.8% whilst the CTR increased with 22%:
These are significant changes in both metrics, indicating a better ad quality that led to a higher position and a lower cost per click.
Scenario 3: Additional competition on your keywords
When new competitors enter the market, or when existing competitors increase their ads budgets and bids, there will be more competition in the ads auctions on your keywords the drives up the price. Determining whether new competitors have entered the market will require some digging in your Google Ads account.
By reviewing the Auction Insights report, and manually selecting months where your budget (and campaign setup) remained the same, you will be able to determine if an increase in competition is the cause of the increase in CPC.
In the sample below, I’ve compared the Auction Insights report for Sep 2020 with Nov 2019:
Not only did our Impression share decrease by 6%, our Absolute Top of page rate and Top of page rate decreased in the last 10 months.
The main factors influencing your click through rate are:
- Keyword relevance – Do your targeted keywords match the user’s search intent?
- Ad quality - Do your ads include keywords, value propositions, and a call to action?
- Average position – Though Google has hidden the exact average position, you can review your Top Impr. Share (position 2 – 4) and your Absolute Top Impr. Share (position 1) to see if there were any changes here.
CTR Scenario 1: CTR Increases but CPC Decreases
In the below sample, our CTR increased significantly while our CPC decreased:
This means that our ad quality and keyword targeting improved in the previous period, resulting in a higher quality score and a lower cost per click.
CTR Scenario 2: CTR Decreases but CPC Increases
In the sample below, our CPC increased with 17% whilst our CTR decreased slightly:
This can be caused by the combination of a lower ad quality and a higher average ad position. You will need to check the changes in your Top Impr. Share %, Absolute Top Impr. Share, and Historical Ad Quality to determine which factor is the biggest culprit.
After further investigation, we determined that our average position increased significantly. We’ll need to make changes in our bidding and ads to decrease the CPC.
Finally, if your CTR decreased and your CPC decreased, your average position likely decreased in the past month:
Final note on CTR Performance review
Keep the % changes in mind. In the last example, the CTR only dropped with 4.1%, whilst the CPC decreased with 32%. In this event, the ad quality likely improved, even though your average position decreased.
Changes in the number of conversions generated in a month can be influenced by the following factors:
- Changes in the ad spend
- Changes in the cost per click
- Changes in the conversion rate
Scenario 1: When an increase in conversions isn’t due to better campaign performance
At first glance at the Conversions metric below, it may appear that our campaign performance improved because there were 20% more Conversions, compared to the previous period:
However, our Conversion Rate decreased with 15.5% which led to an increase in the cost per lead. The main reason why the decreased conversion rate didn’t lead to fewer leads is because we spent 38.3% more in the period.
Our decreased Avg. CPC mitigated the poorer performance of the conversion rate, which means that our cost per lead only increased with 14.9%, and not 15.5%.
Scenario 2: When an increase in conversions is due to better campaign performance
In the sample below, there are a lot of green arrows, indicating positive changes on all the main metrics (except cost per click).
In this sample, the number of conversions increased with 39% because our Conversion Rate (leads ÷ clicks x 100) increased with 56.6%.
Our total number of conversions didn’t increase with 56.6% because our cost decreased with 10.5% and our CPC increased with 0.7%.
In the following sample, our conversion rate decreased slightly, but the overall account performance improved (decreased CPC thanks to better ad quality), resulting in more leads for the spend:
Scenario 3: When a decrease in conversions isn’t due to poor campaign performance
In the sample below, we only have a slight decrease in the number of conversions, but the principle remains the same even if the decrease is more significant:
Looking at the cost (total ad spend), we note that there was a 33% decrease in total spend. But, thanks to an improved conversion rate, and decreased cost per click, we were able to generate the same number of leads despite our decreased budget.
Scenario 4: When a decrease in conversions is due to poorer campaign performance
In the sample below, our conversion rate decreased with 47.3%, resulting in a significant increase in the cost per lead:
Staying with the same sample, though our cost per click decreased, it was likely due to a lower average position because our click through rate decreased significantly too:
Changes in the cost per conversion can be caused by either a change in the cost per click or a change in conversion rate.
Scenario 1: Cost per conversion decreases
In the sample below, our cost per lead decreased with 30% due to a combination of a decrease in CPC (12%) and increase in Conversion rate (25.7%):
Thanks to these two improvements we only generate 10% fewer leads despite a 37.1% decrease in our total budget spend for the period.
Scenario 2: Cost per conversion Increases
In the sample below, our conversion rate only decreased with 4.6%, while our Avg. CPC increased with 28.8%, the effect compounded, and we saw an overall increase of 35.2% in the cost per conversion:
Assuming that there weren’t any dramatic changes made on the campaigns, changes in the conversion rate can occur due to external factors as well as on-site factors.
External factors are events outside of your control, these include changes in buyer behaviour (think seasonal changes, or unexpected events like COVID-19, etc.).
When there is a significant change in conversion rate, we recommend reviewing the following on-site factors that influence conversion rates:
- Site functionality - forms working / not working, shopping cart checkout issues
- Site load speed – slow landing pages and slow websites lose a lot of their earning potential,
- Conversion tracking errors – The Google Analytics or Google Conversion tracking on your site changed / was removed.
We typically start with on-site factors because these issues are easier to find and are within our control to improve. Should the on-site factors be intact, you can look into external factors that are outside your control by:
- Using Google’s Keyword Planner to review historical search trends for your targeted keywords.
- Using Google Trends to see if there are any unconventional spikes or dips in your search traffic.
- Reviewing your Search Terms Report in the Google Ads interface to cut out any irrelevant search queries that caused wasted spend.
It’s easy to assume that a campaign is doing well when you only look at specific metrics on your Google Ads Report, but these metrics need to be monitored in conjunction with each other to ensure that informed decisions are made when adapting budgets and making campaign changes. Contact us for more information and Google Ads training.