Google Ads is all about a mix of these critical elements depending on the campaign's objectives:
- Traffic
- Bidding
- Budgeting
- Goal Conversions
- Lead Generation
- eCommerce Sales
So you have to know what is working out of these elements and what isn't. To do this having some essential KPIs and calculated metrics to help understand your success. So below are some straightforward maths with examples to help assess what works in your Ad campaigns. At the bottom is a free spreadsheet to handle your calculations.
Traffic
Click Through Rate %
Clicks divided by impressions, times by 100
10 clicks / 100 impressions x 100 = 10% CTR
Shows which ad & keyword has high preference rate with the audience
CTR = Click Through Rate
Avg. Cost Per Click £/$/€
Advertising spend divided by clicks
$100 or £100 or €100 / 1,000 = $/£/€ 0.10 CPC
allows comparison between ads, keywords, ad Groups, campaigns & channels
CPC = Cost Per Click
Click To Session Ratio
Click to session ratio – sessions divided by clicks times 100
950 session / 1,000 clicks * 100 = 95%
shows how much of what you pay for (Clicks) arrives at your landing pages
Clicks to Sessions Ratio
Bidding
Search Impressions Share
The number of impressions received is divided by the number of impressions you're eligible to receive as a percentage.
5,000 impressions / 10,000 impression * 100 = 50% SIS
shows the campaign actual performance against opportunity
SIS = Search Impression Share
Maximum Bid For Cost Per Action CPA Target
Target Cost Per Action (CPA) multiplied by your conversion rate (Conversion Rate)
Target CPA = £ $ € 50 * 3% CR = £ $ € 1.50
a guide cost per click for bidding
Max CPC bid for CPA target
Mobile Bid Modifier %
Mobile conversion rate divided by your overall conversion rate, take away 1 and then times by 100
1% (.01) / 3% (.03) – 1 * 100 = 33.333%
how much to change the bidding for mobile targdevice users
Mobile Bid Modifier To Hit Target
Budgeting
You need to split your budget between campaigns, so what is the best method?
Simplest tends to be best to start with, so split your budget into 33% or 25% segments as you learn which campaign, AdGroup, Audiences, and Keywords convert.
Then once the campaign data starts to flow, adjust in Optimization steps:
1st round of Optimization split 66%/33%
2nd round of Optimization split 80%/20%
3rd round of Optimization split 90%/10% – that way, you always have a test budget available
| Campaign | Round 1 | Round 2 | Round 3 |
|---|---|---|---|
| Test | 100% | 20% | 10% |
| Core | 80% | 90% |
Goal Conversions
Cost Per Goal Conversion (CPA)
Advertising spend divided by the number of conversions
£$€ 5,000 / 200 = £$€ 250 CPA
the acutal cost per conversion
Cost Per Goal Conversion
Goal conversion rate %
Quantity of leads divided by clicks, times by 100
200 Goals / 20,000 sessions * 100 = 1%
how much traffic converts to goal completion
Goal Conversion Rate
ROAS Return On Ad Spend %
Total revenue minus advertising spend, divided by advertising spend, times by 100
£$€ 10,000 – £$€ 3,000 / £$€ 3,000 = 2.33 ROAS
how much revenue you get back for each £$€ spent on advertising
Return On Advertising Spend
Lead Generation
CPL Cost Per Lead
Advertising spend divided by the number of conversions
£$€ 10,000 ad spend / 30 leads
the cost for each marketing qualified lead (MQL)
= £$€ 333.33
Cost Per Lead
Lead Conversion Rate %
The number of leads divided by sessions, times by 100
30 Leads / 1,000 sessions * 100 = 3%
what percentage of traffic converst to Marketing qualified leads (MQL)
Lead Conversion Rate
e-Commerce
£$€ Revenue per impressions
Total revenue divided by impressions
£$€ 10,000 / 1,500,000 * 100 = 0.666%
what percentage of advertising impressions GENERATEs ECOMMERCE REVENUE
Revenue Per Impression
£$€ Revenue per conversion
Total revenue divided by conversions
£$€ 10,000 / 500 = £$€ 20
average order value
Revenue per Conversion
Video Metrics
Video view rate %
Total views divided by impressions, times by 100
10,0000 total views / 1,000,000 impressions x 100 = 10%
what percentage of people engaged with a video advert
Video View Rate %
Avg. cost per view £$€
Advertising spend divided by total views
£$€ 2,500 / 10,000 views = £$€ 0.25
how much a video view cost
Average Cost £$€ Per View
I hope that helps explain some of the formulas used in Pay Per Click advertising to calculate critical metrics.
And now it's your turn to run your own Pay Per Click performance metrics calculations.
I will send you a link to the Free Google Sheet with all these metrics to input and calculate your own campaign performance.
