Last week, when I discussed PPC bidding strategies, I promised to start a discussion about how and when to make decisions about your PPC campaign's keyword and ad performance.
But first, it's worthwhile to emphasize an important point: almost every action you take to improve your PPC ad campaign should be based on conversion data.
Many PPC newbies neglect to set up conversions tracking, and base their assumptions about campaign performance on the number of impressions and clicks, on ad position, and on CTR.
Wrong, wrong, wrong.
Those metrics are useful to gauge a campaign's ability to drive traffic to your site -- and especially the ability for a particular ad to attract clicks. But they tell nothing about your campaign's ability to drive sales or leads.
Tracking and reporting on conversion data, and fine-tuning a PPC campaign's performance based on that, sets PPC advertising apart from other advertising channels that have no such built-in abilities.
Here's how you should view the most important metrics regarding your campaigns:
The number of impressions indicates how often your ad is displayed, and is a measure of the number and effectiveness of the keywords in your campaign.
The number of clicks and the CTR indicates how well your ad is working to convince those viewing the ad that your site/offer corresponds well to the intent of their search.
The number of conversions and the conversion rate indicates how well your keywords, ads and landing pages are working together to convince PPC-driven site visitors to take the action that is the objective of your site -- usually sales or leads.
Since conversion data is necessary for you to judge how well your PPC campaign is working -- to decide whether you've chosen the right keywords, written compelling ad copy, adjusted your bids to obtain maximum ROI, and designed your landing pages correctly -- it's essential that you set up your site with conversion tracking.
Google, Yahoo and Microsoft supply clear instructions for accomplishing this, so I won't describe the process here. Google's especially-clear instructions can be downloaded in PDF form here.
Side note: if your in-house or outsourced web design folks tell you that setting up conversion tracking is hard/expensive/time-consuming: get a second opinion. Fast.
Third side note: many PPC advertisers need to know and report data that is difficult or impossible to obtain via the conversion tracking described above. For example, for many eCommerce advertisers, knowing the number of conversions (sales transactions) is insufficient; they need to know the exact revenue from each conversion in order to determine their PPC campaign's effectiveness (profitability).
Fortunately doing so is straightforward -- measuring exact revenue is the forte of most web site analytics packages. One fine example is free: Google Analytics. For AdWords advertisers, Google Analytics is automatically "tied" to their PPC campaigns, and can be easily set up to track revenue per transaction -- start here to see how. Google Analytics (and other web site analytics packages) also show you a wealth of information that will help you optimize your PPC campaigns -- like data regarding how many shoppers are leaving your site before completing a shopping transaction.
Listen to David sharing his PPC tips in a live Search Engine Watch Webcast, "Profitable PPC: The Fundamental Secrets," on October 22, 2008.