ad spend: revenue ratio
“Arrange your data by CPA,” Steve tells me on my third day at Attacat. I stare blankly back at him. “Then check that against traffic and get back to me,” he finishes. I have no idea what he means. As a relative newcomer to the titillating realm of online marketing, one may be rather overwhelmed by the sheer volume of industry terms and acronyms being tossed to and fro, like so many snowflakes in a winter flurry (we’ve had a lot of terrible weather in Edinburgh, lately). Understanding what they mean is certainly one thing, but understanding how they relate is an entirely different problem. AdWords is telling you your impressions have doubled and your position has dropped, and what is that column over there – conversion rate? 0.5%?? That doesn’t sound good at all! But fret not fellow pay-per-click adventurer: I have cut a path through this dense forest of terms, charting a map along the way.
Ad Spend Revenue
The ratio between advertising spend and the revenue generated. It measures the same ratio as a Return on Investment (ROI) but displays it as a margin rather than an integer.
There are many places your ad can appear after someone has searched for your keyword. Google typically reserves the top three ads for the very top of the page, just below the search bar. For positions any lower than that your ad will most likely appear down the right-hand side of the screen or even on the second or third pages of the search results.
Ad Group Ad groups come right below campaigns in the organisational structure of AdWords. These allow for an even further distinction between your products and, as the name suggests, these are where the ads you write are stored! You only need one ad per ad group, but good practice suggests having at least two so you can compare the performance of different types of ad copy.
An AdWords account is broken down into multiple subsections. An account generally encompasses an entire company and all the products they offer, and campaigns are the organisational tier just below the account level. You can use campaigns to separate the types of products you offer by type, function or brand, or use it to target different kinds of people in different locations. You can even have campaigns that do all of these things at once.
The actual number of times your ad has been clicked. It doesn’t count as a click if someone looks at your ad and then types your URL directly into the address bar, or if someone sees your PPC ad displayed but then clicks your organic search listing instead. It DOES count if you type in your own keyword and click your own ads. Don’t do this.
Also known as your spend. This figure is a multiplication of your CPC and Clicks.
This figure is a calculation of how many people visit your site after clicking your ad and then convert into customers. It’s calculated by dividing conversions by clicks and representing that number as a percentage.
This is where it gets a bit tricky, because actions go by many names. You may see them in AdWords as conversions, while Google Analytics goes a bit rogue and calls them goals. You’re also likely to hear actions called sales, leads, and, if you’re advertising on Facebook, likes. Essentially this figure is anything you want to achieve from a customer, be it collecting their email address or selling them a chocolate bar (I may or may not be eating a chocolate bar right now).
Cost per click. A great bidding war is waged each time a Google user enters a search query; after the battle is won (it takes less than a second) and a searcher then clicks an ad, Google charges the competitors accordingly. You’ll only actually pay the minimum amount needed to win the bidding war no matter how high your bid, and because you don’t always pay the same each time your ad is clicked the cost per click AdWords displays is usually an average for whatever keyword, ad group, or campaign you happen to be analysing.
ad spend revenue
= ad spend: revenue
Click-through rate. This shows you the percentage of people who view your ad then click on it, or (total clicks)/ (total impressions). AdWords already displays the clicks and impressions in separate columns, but does the math for you anyways. How nice of them.
The total amount of revenue tracked that’s been attributed back to the PPC activity. It doesn’t include revenue attributed to other mediums or sources such as Google organic traffic or direct traffic.
Impressions The number of times your ad has been displayed either through a display ad or after someone has searched your keyword. It doesn’t matter whether or not someone actually noticed the ad unfortunately: if the ad is shown somewhere on the page it counts as an impression, regardless of the searcher’s interaction with it.
Do you feel a little better? I certainly do (although it may have been the chocolate bar). Be sure to watch this space for the next thrilling installment of “My First PPC Dictionary” – next time we’ll be defining what exactly Facebook means when they say “power editor”. *I was right in the end. “CPA” doesn’t exist in AdWords. Broken down, the acronym means “Cost Per Action”. AdWords calls it “Cost/ Conversion (1-per click)”. They like to keep you on your toes.