Understanding your next Google AdWords Report
This article doesn’t aim to explain all Google AdWords and report statistics, but it will help you understand what is going on in the next report your online marketer sends you. Most reports are sent, and should be sent, with a comparison of one period with another. A good measure is comparing one month to the next, but this will by no means paint the whole picture. With this in mind, let’s begin.
Impressions are the number of times that your ad appeared on either the Display Advertising Network or the Search Advertising Network. See the screen shots below for samples of each.
Search advertising impressions refer to the times your ads appeared when a user searched a specific keyword that is closely related to your product or service. Display advertising impressions are banner ads that appear on other websites and can be targeted in many ways.
Top reasons why impressions might be less than a previous period:
- Less budget: If your budget changes monthly, the number of times your ads are eligible to appear will be less.
- Higher click-through rates: If your click-through rate increases in the period, then you are getting more clicks from the impressions your budget allows for.
- Higher cost-per-clicks: If your cost-per-click in the period increased, it has a direct effect on how soon your daily budget is depleted and how often your ads are eligible to show.
- More refined targeting: Getting the most impressions isn’t necessarily a good thing, a targeted campaign will always look to focus on a specific marketing objective and, if that objective is to generate leads, more impressions do not mean better.
Clicks are the number of times users clicked on one of your ads and visited your website. The cost-per-click, which will be dealt with in the next section, can vary drastically between the Search and Display advertising networks.
Top reasons why clicks might be more than the previous period:
- More budget: The quickest way to increase the number of clicks received over a period will be to add budget to your campaigns.
- Better ad positions: If your ads are performing better due to an improvement in ad copy or an increase in bids, then a higher average ad position will lead to more clicks. See the screen shot below for positioning on the Search Advertising network.
The click-through-rate is the percentage of users who saw your ads and clicked on them to visit your website. Click-through rates are calculated as follows:
Clicks / Impressions x 100 = Click-through rate
According to a Google employee, an average click-through rate is between 1 - 2%, anything above that is considered above average. However, as a Google AdWords Agency, we amend or remove any ads that have a click-through rate below 3%.
Top reasons why click-through rates improved:
- More refined targeting: The longer an account is active, the more data is available to the online marketers to make informed decisions about what is working and what is not. This data is then used to remove inefficient keywords and add negative keywords that prevent ads from displaying when the product or service doesn’t match the searchers’ intent.
- Better ad rank: Ad rank affects where your ads appear on the Search Advertising network. Higher positions tend to result in higher click-through rates.
- Better ad copy: Better advertising copy has a positive influence on the click-ability of your ads.
Conversions / Acquisitions
Conversions/acquisitions are goals that visitors on your site completed that is considered valuable. This may be the completion of a contact form, signing up for a newsletter, completing a purchase, or clicking on a number to phone your company. If you are uncertain about what is considered a valuable action, ask your online marketing team to add this to your report.
Top reasons why conversions are less:
- A change in the landing page: Have you made recent changes to your website or landing page? If so, this may have changed the impression that visitors have of your business and driven them off before they were able to complete a valuable action.
- Fewer clicks: Fewer clicks might be a symptom that points to a different problem on the AdWords account and can be solved with one of the many diagnostic tools available on Google AdWords.
- Change in season: If the same number of clicks are being generated from the previous period, but conversions have dropped, check the seasonality of your product or service. If a specific period is known for lower sales, take this into consideration when reviewing your report.
- Lower keyword & ad relevance: If you have an increase in clicks, but a reduction in conversion rate, there may be ads, and keywords that are triggering your ads, that create an inaccurate expectation in the visitor.
The conversion rate is the percentage of visitors who clicked on an ad on the Display or Search Advertising Networks and completed a valuable action on your website. The conversion rate is calculated with the following formula:
Conversion / clicks x 100 = Conversion rate %
Reasons for an increase in conversion rates:
- More relevant clicks: When a user’s intent is matched with relevant landing page copy, the likelihood of the user converting into a lead increases drastically.
- Improved targeting: Improved targeting and bidding focus a monthly account budget on the campaigns, keywords, and channels that deliver the best results.
- Seasonality: Most products and services are linked to seasonal buying cycles and may have affected the conversion rate on your website.
Cost per acquisition
Cost per acquisition should not be confused with cost per click. The cost per click is the amount an advertiser pays for a user to click on their advertisement. The cost per acquisition takes into account the number of clicks it takes before someone completes a converting action on your website.
To simplify, let’s say you are paying R5 per click, and every 10th visitor completes a conversion account. The cost per acquisition will then be R50.
Top reasons why cost per acquisition may increase:
- Lower conversion rates: If more clicks are irrelevant, you will spend more money per acquisition.
- Higher costs per click: If your conversion rates are the same, but your cost per acquisition is higher the most likely reason for an increase in cost per acquisition is a higher cost per click.
The most important AdWords metric
Though high figures on any of these metrics may seem impressive, the value of any AdWords and marketing campaign is measured by return on investment (ROI). Knowing what your return on investment is will help you determine if the money you are spending on AdWords is being spent well.
To start off, it is import to track your lead sources with lead tracking software to establish which channels are generating the most valuable leads. Once you have established which channels are generating good leads, you can use Google’s formulas to calculate the value of each conversion. Once you’ve identified channels and strategies that work well, you can generate more of the best quality leads with better budget allocations.