Search engine marketing or commonly known as SEM refers to paid advertisements on search engines such as Google, Yahoo and Baidu. Through the placement of ads and payment to the search engines, your brand’s offerings gain instant visibility as a result on search engine results pages (SERPs).
Given that most of these search engines reserve their top spots for paid listings, SEM campaigns are a great way for giving your brand and website instant exposure.
Yet, as a SEM agency, we can testify that not all SEM campaigns are run equally well. There is a huge disparity emerging between those that are strategically run and those which are without thought. How then can you ensure that your SEM campaign falls within the former and produces great return on investment?
Like any other marketing campaign or effort, the answer lies in having relevant data to track. Thereafter, adjustments can be made to your campaign to continuously move it in the direction of its goals.
In this article, we will be looking at SEM metrics that can help you make strategic campaign decisions. For ease of reference, we will be largely using Google Ads as a teaching base. However, these metrics also apply to other SEM platforms.
Getting the most out of Google Ads
If you have ever tried to run your own Google Ads campaign and had the experience of working on its interface, then you would know how complex it can get. You probably would have gotten use to the default data displayed such as impressions, clicks and cost.
Yet, to run highly efficient and targeted campaigns you need to be able to grasp intermediate level metrics. In this article, we shall be looking at several of these data:
- Average Cost Per Click (CPC)
- Average Cost Per Thousand Impressions (CPM)
- Click Through Rate (CTR)
- Conversions & Conversion Value
- Cost Per Action (CPA) & Return on Advertising (ROAs)
- Impression (Top)%
- Quality Score metrics
Average Cost Per Click (CPC)
Average CPC is a measure of the average amount you are paying for 1 click on your campaign’s ads. In layman terms, for normal search ads, it is the cost of having 1 person visit your website. As such, it can be used to understand how cost differs between a particular keyword, ad group, campaign or ad.
Formula: Cost / Clicks
CPC graphs give you an idea of whether the cost of getting one additional user to your website is increasing or decresing.
Critically, it can also be used as a benchmark for you to identify if you are overpaying or under bidding for a keyword.
Commonly, advertisers can use CPC to determine appropriate bid amounts for their desired ad positions. If you determine that you do not require to be at the top of rankings, then consider lowering your bids to land in second or third place.
Another way to use CPC is to figure out which keywords or ads to change should their CPC be too high.
Average Cost Per Thousand Impressions (CPM)
While most search engine ads use CPC as their pricing metric, there are others which use CPM. These are widely utilised for display or video ads where their purpose may not be to deliver traffic to your website. Instead, they might be purely for brand awareness and thus impressions are sufficient for the task.
In return for the lower barrier for charging, CPM does typically cost you less. This in turn allows you to reach out to more users with the same budget as compared to CPC based ads.
A close variant of CPM is VCPM, also known as viewable cost per thousand impressions. VCPM functions much the same way as CPM but introduces a higher barrier to charging.
How much of an ad must be viewed in order to count towards an impression.
In this case, users must have viewed the ad for a certain amount of time or a sufficient portion of the ad must have appeared on the user’s screen. This metric is preferable as it prevents your campaign from being charged for non-viewers.
Click Through Rate (CTR)
You would probably have learnt about clicks and impressions before. If so, then CTR is just a blended metric of the two.
Formula: Clicks / Impressions
The CTR tells you of all the times users saw your ads, how many clicked on them. In most cases, the higher the CTR, the better your campaign is performing. You can also infer that where CTR is low, your ad is likely unattractive or irrelevant for the search performed.
The higher the CTR is, the more time efficient your ads campaign is.
We recommend using the CTR of keywords and ads to determine if your ads are attractive to relevant audiences. Furthermore, do try performing some form of A/B testing with your campaign and recording changes in CTR.
For example, you could include an offer of “free delivery” to see if it is enticing to users. Should CTR increase following its implementation, you can infer that users are keen on the offer.
Conversions & Conversion Value
We have included “conversions” and “conversion value” as many first time Google Ads users fail to set them up. When you create a campaign, Google Ads will prompt you to set up conversions. There are multiple ways to do this depending on your website’s objectives and how they are measured.
Submitting lead forms
Many websites are created in order to entice the submission of lead forms from users. This is particularly so for any business that provides a service. Nonetheless, in order for a conversion to be recorded, you first need to be able to automatically detect a form submission before linking it over.
- “Thank you” page redirection after a form submission – place the event conversion code on the page. Upon the page loading, Google Ads will record a conversion.
Event snippet for conversion tracking using thank you page views.
- Confirmation message for form submission – use the ID or CSS selector function in Google Tag Manager. Once the successful submission message is shown, Google Ads will record a conversion.
- Using inherent form plugin data values – check your plugin’s guidelines for linking conversions to Google Ads. Commonly, form plugins do push data into the data layer which can be tagged in Google Tag Manager.
You can also attach a financial value to the submission of a lead form. However, it should be noted that the value will be constant. As such, should you value different service enquiries differently, do either have multiple conversions or set up a dynamic value insertion on the backend.
E-commerce websites typically rely on conversion value as its primary performance metric. This is because it is very important to know the amount of revenue brought to you by keywords or ads. Furthermore, since products are purchased on the spot, you would immediately know the value of the conversion.
- Using a CMS e-commerce system – check for your CMS’s guidelines for linking purchases to Google Ads. Commonly, CMS have plugins that directly export purchase values and link to platforms like Google Ads. Using these plugins will save you a lot of configuration time and effort.
- Using a custom or any other e-commerce system in general – two steps are needed here. Firstly, request your tech department to generate dynamic values for purchases on the server side. Secondly, modify the base code in order to receive these dynamic values.
Pushing dynamic values to the data layer in order to be tracked in Google.
Conversions are a critical data metric as it informs you of the return you are getting for spending on Ads. Moreover, it tells you which keywords and ads are working for you.
Cost Per Action (CPA) & Return On Ad Spend (ROAs)
Just like CTR, CPA is a blended metric based on 2 fundamental data points, your cost and conversions. CPA measures the average amount you are paying for a conversion.
Formula: Cost / Conversions
If you have ever seen an episode of the reality series “Shark Tank”, then you would know how critical your business’s cost per acquisition is. The CPA is an incredibly useful metric as it helps to inform you how much you need to pay for a single potential acquisition. As user friendly and lightweight metrics such as clicks and conversions are, they do not tell you about the effectiveness of your campaign.
CPA looks at the relationship between cost and conversions. A good campaign will see a drop in CPA over its lifespan.
After all, if you were to throw millions into any campaign, it will at some point give you back some number of conversions. Yet, this will not represent a sustainable or healthy marketing effort.
The CPA also ties in with a related metric known as the Return on Ad Spend (ROAs). Simply put, ROAs gives you the return on investment for your marketing campaign.
Formula: Conversion Value / Cost
ROAs is important as ultimately; you should be getting a net benefit from running an ad campaign. If you fail to track your spending and revenue, then you might be unknowingly overspending. This is why ROAs is seen by many marketers as the ultimate metric for success in any Ads campaigns.
Impression Top (%)
The Impression (Top) % is a relatively newer metric, having been introduced in 2018 as a search ads position metric. As the name suggests, it effectively tells you how often your ad is in one of the top positions.
Formula: number of ad impressions that are above organic results / total impressions
Under normal circumstances, it is desirable to have your ad in the top few positions. This is due to users typically choosing a listing within the top 8 results. Should your campaign have a low impression (top) %, it is likely to also have a lower CTR.
Looking at the relationship between click through rate and impression (top) %.
In order to boost your impression (top) %, you would need to experiment with possible campaign changes. This could include switching keywords, modifying ads, increasing bids and working on your ads’ quality scores.
Quality Score Metrics
Did you know that Google Ads features a real time auction whenever a user performs a search? This auction determines which ads are shown and in which order. Part of the auction is the bid placed by your campaign. However, there is another half of the equation known as quality score.
In layman terms, quality score measures how relevant your ad and landing pages are in relation to the search query. A higher quality score would thus allow your ad to secure a good position without needing to bid a large amount.
3 sub metrics exist under quality score:
- Expected CTR – the historical performance of your ad matters. If it has been proven that users searching for a particular query have frequently clicked on your ad, then it should be offering some value to them. As such, the higher CTR in the past, the more likely your ad will be shown.
- Ad relevance – the closer your keywords matches the messages in your ads, the better your ad relevancy. This prevents bait and switch like tactics whereby the ad does not address the keyword and thus might mislead the user. It is a good practice to either incorporate the keyword in your ad or to address likely queries involving your keyword.
- Landing page experience – Google closely monitors your chosen landing pages and assesses them. Primarily, your landing page should match your keywords and be user friendly. This means that if your landing page has plenty of ads, slow loading times or does not have relevant content, you can expect a penalised score.
Landing pages should be optimised to get good quality scores for your keywords.
Interested to Learn More?
Want to find out how you can have highly precise and efficiently run campaigns that return a good return on investment? Speak to our digital marketing team at MediaPlus Digital. We are a leading digital marketing agency in Singapore, who have run 100s of SEM campaigns for our clients.
At all times, we help brands to achieve their marketing goals while also delivering transparent data metrics for them. This allows us and our clients to make informed decisions with positive marketing impact.
Reach out to us today for a free consultation!