The primary metric (measurable data, reports, numbers, results) for any ad campaign, let alone Google AdWords or some other Search Marketing endeavor, is long term ROI (Return On Investment). Simply put, when all is said and done what anyone that spends money on advertising wants to know is have I received sufficient value back on the money I have spent. Even more simply: Was it profitable. This is obvious.
But how you assess and measure that primary ROI metric, and what kind of secondary metrics and indicators best point to long term ROI success, now that’s where the fun starts.
When it comes to developing and maximizing a Google AdWords account I have found CTR (clickthrough rate) to be the most valuable lead indicator. To me a lead indicator is the metric you go to first, and most often. CTR is the amount of clicks through to the website, in relation to the number of times ads are served up on a SERP (Search Engine Results Page). The higher the CTR, the more frequently searchers are clicking on ads and landing on the target landing page.
CTR is so important when managing AdWords for two reasons. First it is your Hot-Cold meter. Am I on the right track? Am I fishing in likely waters? What keyword/ad creative combinations are resonating with searchers? The second reason CTR is important in AdWords strategy and management is that Google uses CTR as an integral part of their Quality Score.
CTR x Max Bid use to be the formula that determined where an individual AdWords ad would be positioned on the SERP. Now other factors also go into the calculation of position. The main current factors being Quality Score, Maximum Bid, and landing page relevance. CTR plays a large roll in determining Quality Score and thereby still plays a substantial role in determining position.
A lead indicator does not do the job alone. In fact CTR, by itself, even though it is the best AdWords lead indicator, does not guarantee successful ROI. Each business, market, and website is different. It is possible that paying less, in a lower position; which usually results in a lower CTR, may at the same time generate a higher Return On Investment. This is especially true with prime words that generate bidding wars for the top positions. CTR is not a silver bullet.
A well designed system of conversion metrics (both short and long term) is the best path to successful ROI as perceived and evaluated by the client. But conversion metrics can get tricky in a hurry. A conversion can be many things, for the most part it is a measurable action taken by the prospect; a purchase is probably a conversion that most often comes to mind.
Subscriptions, downloads, contacts form customers, key page views, are other examples of common conversions. A client’s business model, website, and technical resources play a large part in what kind of conversion metric strategy can be formulated and implemented.
-T
Tom Hale
Internet Strategist-AdWords Specialist
http://ThomasCreekConcepts.com/
The primary metric (measurable data, reports, numbers, results) for any ad campaign, let alone Google AdWords or some other Search Marketing endeavor, is long term ROI (Return On Investment). Simply put, when all is said and done what anyone that spends money on advertising wants to know is have I received sufficient value back on the money I have spent. Even more simply: Was it profitable. This is obvious.
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