PPC Basics for Online Businesses

 Are you ready to take on a Pay-per-click (PPC) campaign for your eCommerce startup but don’t know where to start? Get your feet wet with these PPC basics for online business.

For easier reading, we’ve divided these PPC metrics into two major categories: basickeyword and ad-specific metrics and the more advanced results-based metrics.

Keyword and Ad-specific Metrics 

1. Clicks

 Clicks and impressions are the top two metrics by which most eCommerce websites measure their performance. If there are spikes in your eCommerce site’s click volumes for instance, identify which factors can be strengthened to improve performance. If there are noticeable slumps in click volumes on the other hand, single out issues that could be causing it, from ad keywords to seasonal lulls. 

2. Cost per Click (CPC) and Click-Through Rates (CTR)

 CPC is the average amount you pay for each click and depends on several factors including competitiveness of keywords, maximum bids, and keyword length. If the average click on your ads costs $1.00 and you want to get 20 sales on a conversion rate of 2%, your monthly CPC budget should be $1,000 (1000 clicks * 2% conversion rate = 20 sales + 1,000 clicks *$1 = $1,000).

CTR measures how often your ads are clicked through against the times it was shown. If your ads were clicked on 50 times versus the 1,000 times it was shown, the resulting CTR would be 5%.

Keep a close tab on both CPCs and CTRs to measure your PPC campaign’s success. 

3. Quality Score

 Your eCommerce website’s quality score is a numerical value assigned to keywords. This is determined by Google based on:

  • Past and overall CTR of your keywords
  • Keyword relevance to ad text and users’ search
  • Landing page quality

Keep your quality score high by focusing on providing the best experience for user search, instead of simply dumping loads of money on advertising.Results-based Metrics 

4. Conversion Rate

 This metric is the actual number of conversions your advertising efforts generate. A high conversion rate not only connotes a relevant and competent marketing campaign but also high sales as well. Some points to check in assessing your conversion rate are:

  • Are tracking codes working properly?
  • Are landing page destination URLs functional?
  • Are ad texts and keywords outdated, disapproved, or in conflict?
  • Are ads showing up for unrelated search queries?

5. Return on Ad Spend (ROAS)

 Also known colloquially as Return on Investment (ROI), this metric measures the return you get on your site’s PPC costs. You can calculate your ROAS by dividing the profit from an ad campaign by the cost of that same ad campaign. If you’re not breaking even on your investment, scale your PPC expenditures and efforts accordingly.