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PPC Analytics: 3 Key Performance Indicators for Your Internet Marketing

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PPC Analytics: 3 Key Performance Indicators for Your Internet Marketing

Without good analytics, 97% of inbound marketing campaigns fail.

Do I have your attention? I should.

This shocking statistic comes from the data in Hubspot’s 2014-2015 State of Inbound Report. Inverted, it means that without good analytics, your internet marketing has only a 3% chance of success.

But what are “good” analytics?

In PPC advertising, there’s a menagerie of metrics that you could be tracking.

Between impressions, quality score, click through rate, time on page, conversion rate, ad rank, and the hundreds of other possible metrics you could be looking at, PPC analytics can be both intimidating and overwhelming.

The question is, which metrics should you be paying the most attention to?

What You Track is What You Get

Before explaining each of these metrics in detail, I want to introduce a principle that applies to every aspect of business: Your business will produce more of whatever you measure.

Or, to put it more simply, “What you track is what you get.”

This becomes particularly important in PPC advertising, where you are paying for every click, and there is an opportunity cost associated with every lead—you can’t afford to spend your time optimizing for the wrong metrics.

For example, in 1990, The New Yorker reported the infamous story of a Soviet nail factory. The government rewarded managers who produced the most pounds of nails, so the factory started to produce small numbers of large, heavy nails.

The Soviets soon figured out what was going on and “fixed” the problem by rewarding the number of nails produced instead.

Guess what happened? The factory started turning out millions of needle-like nails.

As sneaky as this might sound, the factory managers in this story were doing their best to meet performance standards.

The problem wasn’t a lack of motivation. The problem was that what was being measured (pounds and numbers of nails) wasn’t a good reflection of what the government really wanted: an adequate supply of high-quality construction supplies.

Instead, they got what they tracked.

You may have seen the same thing happen in business with Key Performance Indicators (KPIs). Over 77% of companies use KPI metrics hoping for vital feedback on company health and inspire focus on the most important areas.

But not all KPIs are created equal.

If they are not directly linked to real company success, KPIs can quickly lead to time and effort wasted in meaningless numbers games.

As revealed by Hubspot’s data, tracking your online marketing efforts makes your campaigns much more likely to succeed, but if you aren’t tracking the right KPIs, you could be setting yourself up to fail.

With that in mind, let’s take a look at 3 of the biggest KPIs in your marketing campaigns: traffic, conversions, and return-on-investment.

1. Traffic

Traffic metrics like clicks, clickthrough rate (CTR), and cost-per-click (CPC) are some of the easiest metrics to track. Since you are paying per click, every PPC platform automatically tracks this for you.

If you’re new to analytics, traffic metrics are an easy way to get your feet wet. It doesn’t take much to look at your traffic and determine which campaigns are driving the most clicks for the lowest cost.

Essentially, your traffic metrics tell you who is finding you, how they’re finding you and what you are paying to be found. They give vital feedback on which ads are being seen and whether or not those ads resonate with viewers.

This, in turn, allows you to identify and eliminate unproductive keywords, recognize and expand on new niches, and better customize ads to match customers’ interests.

Limitations of Traffic Tracking

As helpful as traffic metrics are, they can be a little hazardous if they are your only measure of success.

In PPC advertising, traffic is what you pay for.

Since what you track is what you get, if you track only the number of clicks your ads receive you may inadvertently wind up optimizing your campaign to spend more money.

More traffic is not the point—more of the right traffic is.

A few years ago, we wrote a Halloween-themed blog post called “6 Killer PPC Branding Tactics Even Freddy Krueger Loves!”

It was clever, funny, and most importantly; it became an overnight traffic bonanza! It showed up on the first page of Google and received 50-200 hits per day!

The only problem was, not a single one of these clicks turned into a conversion.

Why? Because people who found my article were searching for “Freddy Krueger tactics,” not for an internet marketing company.

Ranking for Freddy Krueger Tactics

See? We’re still in the number one spot!

From a traffic perspective, this post was a runaway success. But, it didn’t really do anything for my business.

Fortunately, we didn’t actually put any advertising dollars into this post, but if this had been an ad instead of a blog post, every click would have eaten away at my marketing budget without anything to show for it.

Even worse, if I had only been focused on traffic, I might have been inspired to bid on new horror-genre keywords and have wasted a lot of money without ever knowing that I was only succeeding in confusing film fans.

2. Conversions

You can probably see where I’m going with this. To ensure that you’re getting the right traffic to your site, you need to track conversions.

However, it’s not enough just to track some of your conversions—you need to track everything.

Over the past two years, we’ve audited more than 2,000 AdWords accounts. As part of our audit process, we look at conversion tracking.

Across all of those audits, we discovered that while 58% of businesses with AdWords accounts track conversions to some extent, only 29% do it well.

What Percentage of AdWords Accounts Have Properly Implemented Analytics?

So, why is it so important to track conversions?

Well, traffic metrics tell you what your audience thinks of your ads—conversion metrics tell you what your traffic thinks of your landing page.

As in the previous example, simply having traffic isn’t enough. When you are paying for every click, you need that traffic to do something that benefits your business.

Otherwise, why are you marketing?

Conversions aren’t as easy to track as traffic, but with just a little upfront effort, they can be a very low-maintenance metric.

Limitations of Conversion Tracking

Conversions are generally a more valuable metric than traffic, because those who convert usually have an actual interest in your company.

Still, conversions aren’t exactly the end-all, be-all of analytics.

For example, 96% of first-time visitors aren’t ready to buy…yet. It may take several visits before they make up their minds, but while it may be painful to pay for all those fact-finding clicks, they will be worth it if they lead to future sales.

More importantly, with the exception of eCommerce-type businesses, conversions aren’t the same thing as sales. You don’t make money off of phone calls or form submissions—you make money off of sales.

In fact, the wrong conversions can actually lose you money.

For example, I worked with a client last year who had 127 visits and 84 conversions from a poor confused woman who kept ending up on their site every time she wanted to open her email account.

Her “conversions” cost the company over $1,000 in PPC clicks and wasted salesperson time before they figured out what was going on .

3. Return on Investment

Track traffic alone and you get a million tiny needles. Track conversions only and you may wind up with 5-pound railroad spikes.

The question is, then, what indicator will get you what you really want?

If there’s a golden metric out there, it’s return-on-investment (ROI). Chances are what you really want out of your marketing campaigns is not visitors to your site or extra subscriptions—it’s profit!

So, if what you track is what you get, start tracking revenue!

This idea seems so simple that it should go without saying, but only 21% of companies actually track revenue.

That means the other 80% have no idea whether or not their marketing is making them money!

Why? Well, for most companies, ROI is the most difficult marketing metric to track.

You can’t just add a quick script to your thank-you page or use a call-tracking service. If you’re using PPC for lead generation, you have to take the time set up and manage a good CRM (Salesforce, Zoho, Prosperworks, etc).

I know, setting up and managing a CRM (let alone tracking keyword and campaign performance in your CRM) can take a ton of extra effort, but if you aren’t tracking revenue, you can’t optimize your campaigns for profit.

If you aren’t optimizing your marketing for maximum profit, why are you running PPC campaigns?

The Complete Picture

Once you can track your advertising effectiveness through sales numbers, traffic and conversion metrics become more meaningful.

Essentially, these three metrics work together to create a complete and meaningful picture of your campaign.

Consider what this combination of metrics can tell us about the following campaigns from a hypothetical company:

PPC Campaign Analytics Data – Campaign 1

On the surface, Campaign 1 looks great. It has a great click through rate and a ton of clicks!

The problem is, most of those clicks aren’t turning into conversions. Now, for those clicks that do convert, sales has a pretty good close rate, but the campaign delivers so few conversions that the campaign is losing money hand-over-fist.

There are a few reasons why this campaign might be struggling. First and foremost, lots of clicks with very few conversions is a good sign that you are paying for the wrong traffic.

In this case, it would be a good idea to take a look at your search terms report and see what people are actually searching for when they see these ads.

Another potential problem here is a mismatch between ad and landing page messaging. Maybe the ads are driving the right traffic to the site, but people are expecting something based on the ads that they don’t see on the landing page.

You often see this sort of situation with campaigns that are sending PPC traffic to their home page.

Yes, this campaign is losing money, but that doesn’t mean it needs to be shut down. With a few tweaks, it may be possible to eliminate a lot of off-base clicks and create a stellar landing page experience that produces a lot more qualified leads for the sales team.

PPC Campaign Analytics Data – Campaign 2

With campaign 2, we have a very different problem. Campaign 2 gets a lot of clicks and has an excellent conversion rate. But things fall to pieces when it comes to sales.

Clearly, there’s a big disconnect between conversions and sales.

Sure, it might be the sales team’s fault, but maybe the problem lies with the marketing campaign. In this case, the ads and the landing page might be promising something that is very enticing, but it’s an offer that the sales team can’t make good on.

Remember the Freddy Krueger example? We could have changed our website to appeal to Freddy Krueger fans and maybe a CTA that said, “Get My Freddy Krueger Training Manual” (I shudder to think what that eBook might have contained).

We might have picked up a lot of leads, but none of them would have been interested in our actual sales pitch.

The best way to see if this is the case is to simply talk to the sales team. If the sales team is mishandling the leads, this is a great opportunity to help get them dialed into the marketing messaging.

If the marketing is setting unrealistic or off base expectations, the sales team will provide great insight into why the leads are not a good fit.

PPC Campaign Analytics Data – Campaign 1

Finally, campaign 3 is turning a respectable profit.

Campaign 3 got a lot fewer clicks than campaign 1 and a lot fewer conversions than campaign 2, but the clicks and conversions it is getting are producing a lot of sales and revenue.

They “nailed it”, right?

Yes, the targeting for this campaign is apparently a lot more narrow than the previous campaigns, but clearly, this campaign is targeting the right traffic and delivering a landing page experience that sets the sales team up for success.

Summary

Used together, traffic, conversion, and ROI are key performance indicators that can help you maximize the potential of your internet marketing.

Without these analytics, your campaigns may be doomed to failure.

As you start your quest for high-quality analytics, remember, “What you track is what you get.” Track traffic or conversions only and you’ll probably end up losing money, but track all the way through to sales and you’ll end up making money.

ROI tells you whether a campaign is working or not. As you try to optimize it, conversions and traffic can help you identify whether your problem is at the level of the ad or the landing page.

It might sound boring, but get excited! With a little extra effort, analytics can quickly become the best wingman your marketing has ever had.

I’ve shared my two cents. Now I’d love to hear yours. Tell me about your analytics successes as well as some of the challenges you’ve run into. I look forward to reading your comments!

3 PPC KPIs You Need to Know

Image Credits

Featured Image: digidream/DepositPhotos
Screenshot by Jacob Baadsgaard. Taken June 2016.
All in-post photos and tables by Aden Andrus of Disruptive Advertising. Used with permission.

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Jacob Baadsgaard

Jacob Baadsgaard

CEO, Founder at Disruptive Advertising

Jacob is passionate entrepreneur on a mission to help businesses achieve online marketing success. As the Founder & CEO of ... [Read full bio]

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