5 Most Important Google Ads Metricsby Sally Baker, Digital Marketing Manager on Jul 1, 2020 / Perspective
With so many numbers to look at in Google Ads, it can be overwhelming. What are the most important metrics to track in Google Ads?
The truth is, there are more than 5 important metrics to track in Google Ads. However, for beginners, these are usually the most important ones. The 5th and final metric is more of an advanced metric for those who are more savvy in the Google Ads platform. Let’s dive right in…
This should be a given, right? One of the first things you’ll decide before you even start a Google Ads Campaign, is what your budget is. Know your monthly and daily budget, and make sure to keep an eye on it within the platform.
Don’t be alarmed, however, if and when you see you have gone over your daily budget when looking at your cost. Google is allowed to spend twice the amount of your budget on any given day if they feel it will help increase your conversions. Don’t worry though, they assure you they will not go over your monthly budget. For example, if they spend twice your daily budget today, they may spend less than your daily budget tomorrow, in order to keep you within your monthly budget.
So, although this metric should be pretty hands off, it’s important to view when getting a quick look at your cost over a certain timeline. ie) What have you spent on ads in the last 6 months? How about the last year? You can even look at that in comparison to the prior period or year and then compare this column to the metrics to follow in this article…
If you’re an eCommerce business, this is pretty straight forward. A conversion is a purchase, and this is how many purchases you’ve had. If you’re not eCommerce, your conversion will be defined as what you set it up as in the beginning. This can be a form-fill like a “Contact Us” page on your website. Another example is a lead you get on a landing page from software such as Unbounce or Instapages. Other types of conversions can be phone calls to your business.
You’ll want to track this metric in comparison to the following metrics and the previous one to get a good look at if you’re making a healthy ROI.
So far, you know how much you’ve spent and how many conversions you’ve gotten. So, how much money have you actually made? That is what this column is for. It’s vital to make sure you’ve set this up properly when implementing the tags on your website so that Google Ads can properly display how much money you’ve actually made. Again, this is easiest seen with eCommerce companies.
For non-eCommerce companies, a conversion value will be more broad. If you choose to track it, think about what an average conversion value looks like. For example, if one conversion is one lead, and one closed lead averages out to $500 for your company, then track each of your conversions with a $500 conversion value. This is seen with service companies, firms, and so forth. While these values will not be 100% accurate, if you have an average value of what one conversion looks like, you can get somewhat of a better idea of if your advertising is monetarily beneficial.
Here is one of the most important numbers to look at to see if your ads are financially beneficial. Your cost per conversion is how much money it spent to get a conversion (on average).
For example, if it costs your company $5 to sell a $10 product, and your cost/conv on ads is higher than $10, you’re losing money. If it’s $5, you’re breaking even. If it’s lower than $5, you’re making a profit. Here is a real-life example…
I have a client whose average order is $250. When figuring cost for the product, shipping, etc, and ad spend, we calculated that we need to goal for a cost/conv of $85 and lower in order to make a profit. Currently, our cost/conv for that client ranges about $25, so they’re making a pretty great profit off our ads.
However, it’s important to note the value of your purchases. The client I just mentioned averages $250 an order. If your products sell for a wide range of values, some $5 while others are $500, then you need to take an extra look at your Conversion Value column. If you’re worried about your cost/conv being too high, double check your conversion value column. I once had a campaign that was costing over the goaled amount cost/conv but the conversion value was so high, we were still making a vast profit for the client as we had been able to target that campaign to sell higher priced items and therefore ultimately increased our goaled cost/conv amount for that particular campaign, while leaving the other campaigns at the original goal.
Sorry for all the exceptions, but with data (and Google) there are always exceptions!
This one is for my advanced folks out there. Let’s take a look at what Google defines Conv Value/Cost and then we’ll break it down from there…
“Conversion value per cost (“Conv. value/cost”) measures your return on investment. It’s the conversion value divided by the total cost of all ad interactions.
The cost in this metric excludes interactions that can’t lead to conversions, such as those that happen when you aren’t using conversion tracking.”
Here’s an example… Let’s say your value/conversion is $50. Your cost/conv is $23. Your total conversions is 12, and your total cost is $276. The conv value/cost will be 50×12/276 = 2.2 That mean you earn 2.2 times more than you spent.
Another calculation that will get you here is 50/23 = 2.2
So, while you want to see your cost/conv nice and low, you want to see your conv value/cost increase. Make sense? Great! If not, give us a shout… we love this stuff.
You Did It!
Okay, that’s all for today! Have fun with your ads, and enjoy the numbers. If they seem overwhelming, then head back here and give us a call to see how we can help you maximize your ad spend…and ad space (but that’s for another perspective). Catch you next time!
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