How do you know if your PPC advertising is performing well or not? Do you need to prove the effectiveness of your ad campaigns but aren’t sure where to begin?
In this post, we are going to share a few of the most popular pay per click, or PPC metrics, including what they mean, how to read the data, and what you can take away from the measurements available.
You may find not every metric applies to every advertising campaign. Depending on the goal of your campaign — be it the number of clicks on the ad, engagement with the landing page, or how many people submitted a form — some measurements may be more important than others.
4 Popular PPC Metrics You’ll Want to Know
Clickthrough Rate (CTR)
Clickthrough rate, or CTR, is one of the most popular PPC metrics in paid advertising. It measures the number of clicks your ad receives divided by the number of times your ad is shown to give you a ratio known as CTR.
The clickthrough rate is valuable data for a majority, if not all, of campaigns. It reveals how effectively an ad is getting people to click through to the destination, whether it’s a form submission, app download, landing page, or gated asset. The higher the CTR, the more effective the ad.
Of course, clickthrough rates for PPC ads are notoriously low. For paid search ads, the average click performance is about 2 percent, and it’s even lower (below 1 percent) for display ads. You can check the average CTR by industry to get a benchmark for your own campaigns.
Cost Per Click (CPC)
Cost per click, also known as CPC, is another important PPC metric you’ll want to know for paid advertising. CPC expresses how much it costs you every time someone clicks on your ad. Your average cost per click is determined by dividing the total cost of your clicks by the total number of clicks on your ad.
There are several factors that determine the cost per click. In general, the better your ad quality and performance (and the cheaper the keywords you’re bidding on), the less you pay for each click. This likely will not be consistent across platforms. For example, advertising on LinkedIn is traditionally more expensive than on Google, so your costs may be higher should you choose to advertise there.
What can you expect to pay per click? Here’s a look at the average CPC on Google across various industries. You can see Consumer Services and Legal are among the highest.
Cost Per Acquisition (CPA)
Cost per acquisition, or CPA, is a very popular PPC metric because it tells you how much it costs you every time someone converts. Sometimes, you may hear the terms cost per action or pay per action, which you can interpret the same as cost per acquisition. The CPA is determined by dividing the total cost by the total number of new customers acquired through the campaign.
It’s important to keep in mind that CPA numbers are relative. For example, you may have an average cost per action of $35, while your neighbor has one at just $25. Yet, if the cost of your product or service is $700, then a CPA of $35 may not seem too bad.
Here’s a look at average cost per action for search and display ads by industry.
Conversion rate in paid advertising is the percentage of customers that perform the desired action after clicking on an ad. It’s an important metric because it not only tells you how effective your landing page is at getting conversions, but it also helps you make more money from your ad campaigns.
When you’re looking at your conversion rate data, it’s good to know the average for your industry. In general, the average rate for search ads is 3.75 percent across all industries, while for display ads the average rate is 0.77 percent.
Now that you understand a few of the more popular PPC metrics, you can apply this knowledge to your own campaigns. CTR, CPC, CPA, and conversion rate are important measurements overall, yet you may find that some campaigns benefit from some metrics more than others. It all depends on your goals.
Once you get started with metrics, remember to keep track of these numbers over time to see how well your campaigns are performing!
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