Important PPC Metrics, Simplified

Don't you just hate it when all your SEO pals are throwing around these five dollar PPC analytics terms, and you don't know what in blazes they're talking about, so you just nod your head and smile and pretend that you understand what they're talking about?

Don't be too hard on yourself. We've all been there. And believe it or not, even the ones throwing out he terms sometimes don't even know what they mean ;)

And that's why we're here: to help educate our lovely readers and clients on what theheck wezbre actually doing.

If you need to get some sense of your PPC return on your investment, try out the PPC Blog ROI Calculator at http://tools.ppcblog.cm/calculators/roi.html

§Definitions of some common PPC metrics
1. Cost Per Click. The avg. Amount Google (or whichever ad serving application you're using) charges you for a click on your ad. CPC is calculated over time. The more clicks you get per 1000 impressions, for example, the less you pay for those clicks individually.

Why? The reasoning behind this is that it is assumed that the better your ads, keywords and landing pages, the better will be the ratio of impressions to clicks (this called a Clickthru Rate , or CTR for short). Of course, this isn't always the case in reality, but it is one measure ad serving algorithms like Adwords or or AdCenter use to measure the "quality" of your ad campaign.

2. Conversion Rate. This is a measure of how many conversions an ad or ad group receives divided by the total number of clicks the ad/group receives. A conversion is loosely defined as "an email, phone call, apppointment setting, a purchase, a reservation or other actionable website event that can be attributed to the ad. Conversion rates are usually measured over a month's time.

3. Average Profit per Conversion. To calculate this, you obviously need to know how many conversions your ad generated and how much revenue those conversions produced.

For example, if your ad generated 5 conversions over a month's time (as defined above) and those 5 conversions produced $500 during that month, then your average gross revenue per each conversion would be $100. If your total monthly ad spend was $300, then your net profit per conversion = $200 / 5 = $40.

See, I told you we'd make it simple(r).

4. ROI. All these metrics taken together determine your Return on Investment. ROI is basically the net profit of the ad conversions divided by the monthly amount you spend on those ads.

Using the ROI Calculator, we found that our current ad groups were producing an ROI of 335.97%. No kidding! Even on the most conservative of estimates - that is, utilizing raw monthly spend (what we dropped into the account as opposed to what portion of it we actually spent) - our ROI would still be over 140%.

How did we do it, you ask?

Stay tuned, visit often, meet us for coffee ... Better yet, hire us. And you'll find out!

#seo #PPC #internet marketing