Analytic Metrics 101: Part 2 Acronyms in AdWords

Have you ever been asked to use Google Analytics to do a report, but haven’t gotten past the first screen? With all the acronyms, charts, and graphs, the data can be overwhelming. This three-part series about Analytic Metrics will define some of the most essential metrics for understanding how your website is performing. Last month we covered Page Views, Sessions, Bounce Rate and Exit Rate. Today we’re covering one of the most baffling parts of Google AdWords: the acronyms.

CPC

Definition: Cost Per Click – You pay for each click on your ads.

Translation: If your goal is Website traffic, CPC goals are a great place to start. Google only charges you when users click on one of your ads and is then directed to your website. Say you’re a blogger whose main goal is to get more website views and is using Google AdWords to increase your readership. Using a CPC strategy will help show ads to those most likely to click on them.

Where Can I See This Metric? In AdWords, select Keywords from the left navigation. It can also be found in AdWords, select Overview from the left navigation.

CPM

Definition: Cost Per Thousand Impressions – A way to bid where you pay per one thousand views (impressions) on the Google Display Network.

Translation: If your goal is Brand awareness, CPM metrics are your best friend. For every 1,000 times your ad is shown, you’ll be charged what you bid. How do you know if CPM is a metric that matters to you? For example, say you’re a local cafe that offers a 10% discount for Veterans and Active Military Personnel. You might create Campaigns that target Veterans and their families, with ads that say something like “Hometown Cafe offers 10% off to Veterans and Active Military Personnel with ID.” Obviously a click through to your website would be nice, but the main goal is to get Veterans and Active Military Personnel into your cafe. Therefore, getting this ad seen by the most number of potential customers is more important than people clicking into the website.

Where Can I See This Metric? When your goal in AdWords is Brand awareness and reach (found in Display Campaigns only), select Ad groups from the left navigation.

CPA

Definition: Cost Per Action – The average amount you’ve been charged for a conversion from your ad.

Translation: It’s calculated by dividing the total cost of conversions by the total number of conversions. If your main advertising goal is getting conversions (like sales, signups, or mobile app downloads), then Target CPA bidding can help automatically get more conversions for your budget. It can also help you get more sales while paying less for the clicks that lead to those purchases. For example, say you are a boutique that is having an online sale on shorts. You want to really push the sale out there, and Google AdWords uses Target CPA bidding to decrease your overall cost by paying less for the clicks that lead to conversions (sales).

Important Note: Before you are able to use this method, you’ll need conversion tracking set up.

Where Can I See This Metric? If you don’t see this metric, you might have to add that to your column view of metrics. Do this by selecting the Modify columns icon (the icon looks like three columns). Then, select Conversions. The most basic version of this metric is the Cost/conv. option, but select what data will be most useful to you!

CTR

Definition: Click Through Rate – Calculated by dividing the number of clicks by the number of impressions.

Translation: Why should I care about CTR? This metric is more than just a percentage. It’s essentially a gauge of how impactful your ads are. The average CTR is about 2%, but that average can vary depending on your industry and how competitive the digital ad landscape is. If a Campaign or Ad Group has a low CTR, first instinct is to review the Ads. Sometimes updating the copy, changing the image, or swapping around a word or two can make all the difference in an ad’s performance. If that doesn’t seem to help, review your Keywords (including Negative Keywords). Make sure they actually match up with what you’re trying to advertise. Put yourself into the shoes of the average search engine user: what phrases might they be typing into Google in order to find your product? After all, ad quality and keywords are two of the three major factors for the way Google determines an ad’s Quality Score.

Important Note: CTR is different than Interaction Rate, which also takes into account all actions with your ad, including clicks, views, swipes, calls, and more.

Where Can I See This Metric? In AdWords, select Keywords from the left navigation. It also can be found in AdWords, select Overview from the left navigation.

KPI

Definition: Key Performance Indicator – A metric that helps you determine how well you are doing compared to your goals.

Translation: Selecting your organization’s KPIs can be tricky; it’s easy to get sucked into layers and layers of data. But what pieces of data actually matter to your business? What percentages or numbers actually prove a success? Each organization is different, and determining your organization’s KPI should depend on your unique goals. Say you’re a local bank who has a goal of increasing new clients by 10% from the previous year. By setting up AdWords Campaigns that promote different accounts, loans, or mortgages, you’re on track. But in order to better measure how well those ads are actually working, establishing KPIs will demonstrate clear successes. Some KPIs could be Conversions and Cost/Conversions.

Where Can I See This Metric? There’s no specific spot in Google AdWords that measures this. This is a unique metric that can help you better measure the most important pieces of data. Keep track of this in an excel sheet or a monthly report.

If you want to learn more about this subject check out our part one discussion about Google Analytic Pageviews, Bounce Rate and more! Or, do you have questions about how to set up or optimize your organization’s AdWords? Contact our team on Facebook, Twitter (@MediaG), or phone 248-687-7888, we can help translate the data and provide recommendations to improve your digital presence.