Let’s Talk KPIs: Google Ads Reporting

Successful businesses all have one thing in common: Their decisions are guided by data.

KPIs are a marketing abbreviation for “key performance indicators," a fun way of saying marketing metrics or the numbers you want to see from each marketing campaign. Before launching your campaign, define your KPIs and watch them throughout to ensure you’re on the right track.

If you are investing in Google Ads, it’s very important to know what KPIs to look at, define what a “good” metric is, and understand when to optimize your campaigns based on your KPIs. But if you’ve so much as glanced at your Google Ads dashboard, you know that’s easier said than done. Google Ads gives you a mountain of data to sift through; how can you tell which KPIs are actually important?

After years of running Google Ads for entrepreneurs through Fortune 500 businesses, we can help you navigate the process! Here are the Google Search Ads KPIs we care most about and how to determine if your campaigns are performing well:

Impressions

Every time Google serves your ad, that counts as an impression. The ad can be served to the same person multiple times, so keep in mind. Impressions are a vanity metric when looked at by itself but it is useful when calculating more important things, like CTR. Often time marketers look at CPM (Cost Per Mille) which determines the cost to get 1,000 impressions by dividing total impressions by total cost and multiplying by 1,000.

Click Metrics

Clicks

When someone sees your ad and clicks on it, Google Ads counts that as a click. A click can be counted when the ad, sitelinks, image, video, etc. This isn’t exactly the same as a website visit, though, because it could be a click on directions or your phone number.

Even then, clicks are a helpful metric because they show how interesting your ads are to users. If you have a lot of impressions and no clicks, for example, that means you need to rework your ad copy so they encourage people to click.

Clickthrough Rate (CTR)

Clicks are great to keep track of but it’s almost MORE important to track CTR. Clickthrough rate measures how often people click your ad after it's shown to them, which can help you understand the effectiveness of your ad. For example:

Campaign: “Cloud 6_Search_Shoes_West Coast”

934 clicks

284,735 impressions

0.33% CTR

Campaign: “Cloud 6_Search_Apparel_West Coast”

699 clicks

41,204 impressions

1.7% CTR

Which is a better performing campaign if clicks are important to you? While there are fewer clicks on the apparel campaign, the ad and/or products are resonating better with the audience. Perhaps look into shifting some of the budget to the apparel campaign and tweak the shoes campaign to improve it.

CTR = Clicks ➗ impressions

Click Share

You’ll also want to look at your click share: The number of clicks you get divided by the max clicks you could have received. This metric helps you understand how big of a piece of the pie you’re actually getting. How often your ad is clicked depends on your ads' targeting settings, budget, approval statuses, bids, and the quality of your product data. So if your campaign has a click share of <10%, for example, your competitors are being shown significantly more than you. An easy fix is to (assuming all your other ad metrics are strong) consider increasing your budget if you have it and want to be shown at the top.

Click share = Max # of clicks ➗ your clicks

Conversion Metrics

Conversions

This is a big one. When you open a Google Ads account, you’ll define what is the most important action to you and then add the conversion tag code to your website or to fire via Google Tag Manager.

Some of the more popular conversion types are making a purchase, signing up for your email newsletter, getting a quote, call in, contact us form fill, or even a button click. Conversions in Google Ads shows the total number of conversions you received after someone clicks on your ad. If you have multiple conversion types, this column will include the total but you can drill down to see by type if you’d like more details.

Conversion Rate

Conversion rate shows how often, on average, an ad interaction leads to a conversion. If you are running a campaign to maximize conversions, you’ll want to keep an eye on this KPI as it can show how compelling your landing page or offer is.

Conversion Rate = Conversions ➗ ad interactions

Cost Metrics

Cost

The cost represents the total amount you spent during that period. You can view by campaign, ad group, ad, days of the week, location, and other demographics. (Make sure to change the date toggle when looking for a specific period of time!)

Cost-Per-Click (CPC)

If you’re trying to get the most out of your Google Ads budget, your average cost-per-click should be a metric you watch closely.

For example, if 2 people click on your ad and you pay $1.20 and $1.40 respectively, you’ll have a $1.30 average CPC. Remember that Google Ads is a marketplace, so your CPC will fluctuate depending on inventory, competitors, your ad quality score, and how likely Google thinks your ad will perform. Watch this metric closely to ensure your Google Ads budget is being spent wisely.

CPC = Total amount paid for ads ➗ total clicks

Cost-Per-Conversion

Cost per conversion is what you pay on average for each conversion. We care about this metric because say you sell chocolate and each bag is $8. If the average purchase is for 1.2 bags but the cost per conversion is $45, you might want to evaluate your strategy.

Cost per conversion = Total cost ➗ Conversions

User Experience Metrics

Quality Score (QS)

Your quality score is an estimate of how relevant your ads are to a person who sees your ad. It's calculated using your expected clickthrough rate, ad relevance, historical impressions for exact searches of your keyword, and landing page experience. Better quality scores typically lead to lower ad costs and better response to your ads. Just like how it’s important to target the correct audience, it’s important to give them the best experience after they click. We like to see keyword quality scores of average or, preferably, above average.

Page Speed Score

Before running any ads, you need to evaluate the user's experience (UX) when on your website. Run your URL through Google's PageSpeed Insights to get a technical look at what can be improved. You will get a mobile and desktop score of performance, accessibility, best practices, and SEO for desktop and mobile. Then fix any areas that need help.

Other Important Metrics

Lifetime Value (LTV) or Customer Lifetime Value (CLV)

Although LTV can't be found in Google Ads reporting, it is an important metric to track with an media program you run. LTV will estimate the total value each individual customer will provide to the business over the course of their relationship. Use this metric to define the most profitable customers and helps you set a maximum budget for customer acquisition.

LTV = (Revenue × Lifespan) × Profit Margin

Customer Acquisition Cost (CAC)

Another metric not shown in the Google Ads reports but it important for measuring media impact is CAC. This calculation will help determine the cost in acquiring new customers so you can ensure your efforts are profitable. Cost Per Acquisition (CPA) is similar but looks at only the campaign cost, not all of the costs.

CAC = Total Marketing/Sales Costs ➗ Number of New Customers Acquired

The bottom line

63% of people have clicked on a Google Ad at some point. Google Ads are worth the investment, but you need a strong marketing strategy and then a firm understanding of the KPIs before jumping into Google Ads reporting. The KPIs we listed will help you cut through the data to get a balanced look at how successful your campaigns are.