PPC dashboards are full of data, and there is no shortage of metrics that you can use to measure the success of a campaign. But with limited time and resources, every PPC campaign manager must decide which metrics are worth following and which are not.
With only a handful of metrics falling under the “important” category, I present these two as being indispensable:
1. Return on Ad Spend (ROAS)
For every $1 you spend on advertising, how much new money is brought back into the business? Return on ad spend is your basic calculation to determine whether your ad campaign is profitable or not.
If you’re earning $1 for every $1 spent, you are at a break even level. Of course, this doesn’t account for labor, operating expenses, etc. So truly, a 1:1 (or 100%) return on ad spend is costing you money. On the other hand, anything over 100% is pushing you into profitable territory.
The great thing about measuring ROAS with your PPC campaigns is that once you are in the profitable zone, there is almost no limit to the amount you can raise your ad spend to. If you are profiting $1 for every dollar spent, increasing your spend to $1000 or $10,000 brings you $1000 and $10,000 of additional profit, respectively.
Eventually, you may hit a tipping point, which is when you have to decide if you want more business or more profits. And before you say, “more profits,” remember that a $100% profit on $100 is significantly less favorable than a 25% profit on $100,000. There will come a day where you will have to decide between profit margins and revenues.
2. Cost Per Conversion
What is the cost of that lead or sale? In most cases, every product (or lead) has a different value, so the amount of money you’re willing to invest in getting that conversion will vary greatly as well.
This is where cost per conversion comes in, and rarely is this a global site metric, but rather a product by product metric. Higher ticket items can succeed with a higher cost per conversion. Lower ticket items, not so much.
But as with ROAS, once you know your profitability point, you can invest unlimited amounts of money, knowing that every conversion will be adding rather than taking away revenue.
So there you have it, my opinion on which metrics are indispensable. Do you agree?