The Most Important PPC Metrics You Must Know And Care

Being Able To Understand And Make Informed Decisions Based On PPC Campaign Is Vital To Getting The Highest Return On Investment From Your Ad Spend. But Are Some PPC Metrics More Important Than Others? And If So, Which Ones? In This Guide We’ll Take A Closer Look At The PPC Metrics That Warrant Your Attention.

And If You Are Learner? Some Where You Wonder What This PPC Metrics Telling To You. You Have May Be Serveral Question About It Meaning, Purpose, Calculation Etc…

To Help You With Your Goal Of Getting The Best ROI From Your Paid Ad Campaigns, We Have Highlighted All The Essential PPC Performance Metrics You Should Be Monitoring.

Here Are The Top Most Best Important Adwords PPC Metrics You Really Need To Know And Care About:

1.  Clicks

When Someone Clicks Your Ad, It’s Counted Here. Click
This Metric Is Accredited By The Media Rating Council (MRC) In Desktop And Mobile Environments For The Search And Display Networks

2.  Impression

An Impression Is Counted Each Time Your Ad Is Served. Impressions Help You Understand How Often Your Ad Is Being Seen.

3.  Viewable Impression

“Viewable Impr.” Shows The Number Of Times An Ad Was Viewable. An Ad Is Viewable When At Least 50% Of Its Area Is Visible For 1 Second For Display Network Ads, Or 2 Seconds For Video Ads.

4.  Cost

Cost Is The Sum Of Your Spend During This Period.

5.  CTR

Clickthrough Rate (CTR) Measures How Often People Click Your Ad After It’s Shown To Them, Which Can Help You Understand The Effectiveness Of Your Ad.
CTR Is Calculated By Dividing The Number Of Clicks Your Ad Receives By The Number Of Times Your Ad Is Shown. If You Have 5 Clicks And 1000 Impressions, Then Your CTR Is 0.5%.

6.  Avg. CPC

Average Cost-Per-Click (CPC) Is The Amount You’ve Paid For Your Ad Divided By Its Total Clicks. If Your Ad Receives 2 Clicks, One Costing $0.20 And One Costing $0.40,
Your Average CPC For Those Clicks Is $0.30.

7.  Avg. CPM

Average Cost-Per-Thousand Impressions (CPM) Is The Average Amount That You’ve Been Charged For 1,000 Impressions.

8.  Invalid Click

Invalid Clicks Are Clicks Google Considers Illegitimate. You’re Not Charged For Them, And They Don’t Affect Your Account Statistics.
Google Closely Monitors For Clicks Such As These, Which May Have Been Generated By Repeated Manual Clicks Or By Automated Tools, Robots, Or Other Deceptive Software.

9.  Invalid Click Rate

Invalid Click Rate Is The Percentage Of Clicks That Have Been Filtered Out Of Your Total Number Of Clicks Due To Being Invalid.
Invalid Clicks Are Ones That Google Considers Illegitimate. You’re Not Charged For Them, And They Don’t Affect Your Account Statistics.

10.  Interactions

An Interaction Is The Main Action Associated With An Ad Format. These Include Clicks For Text And Product Shopping Ads, Views For Video Ads, Lightbox Engagement Ads And More.
Interactions Help Determine Whether Your Ads Are Meeting Your Performance Goals.

11.  Interaction Rate

Interaction Rate Measures How Often People Interact With Your Ad After It’s Shown To Them. This Helps Measure Your Ad’s Effectiveness.

12.  Invalid Interactions

Invalid Interactions Are Interactions Google Considers Illegitimate And Doesn’t Charge You For.
What They Are: Interactions On Your Ads That Are Generated By Prohibited Methods, Such As Repeated Manual Interactions, Or Interactions By Automated Tools, Robots, Or Other Deceptive Software.
Why It Matters: Google Closely Monitors All Interactions To Help Protect Your Ads From Receiving Invalid Interactions. You Aren’t Charged For Any Interactions That Have Been Marked Invalid, And They Don’t Affect Your Account Statistics.

13.  Invalid Interaction Rate

Invalid Interaction Rate Is Used To Measure What Percentage Of Interactions With Your Ad, Such As Clicks For Text Ads Or Views For Video Ads, Were Invalid.
How It Works: Invalid Interaction Rate Is Calculated By Dividing The Number Of Invalid Interactions By The Number Of All Interactions.
Example: If Your Video Ad Received 1 Invalid View And 99 Legitimate Views, Then The Video Ad’s Invalid Interaction Rate Would Be 1%.

14.  Avg. Cost

Average Cost Is The Average Amount You’ve Paid Per Interaction.
How It Works: This Amount Is The Total Cost Of Your Ads Divided By The Total Number Of Interactions.
Example: If There Are Two Interactions With Your Ad, One Costing $0.30 And One Costing $0.40, Your Average Cost For Those Interactions Is $0.35.

15.  Views

A View Is Counted When Someone Watches 30 Seconds Of Your Video (Or The Duration, If It’s Shorter Than 30 Seconds) Or Interacts With Your Video, Whichever Comes First.
Eligible Interactions Vary For Each Ad Format, And Include Clicks Or Taps On Calls-To-Action, Cards, Companion Banners, Thumbnails, Or Logos.

16.  View Rate

View Rate Measures The Percentage Of People Who Watched Your Video After They First Saw The Video Or Thumbnail.
It Equals The Number Of Views Your Ad Receives Divided By The Number Of Impressions, Including Thumbnail Impressions For Video Discovery Ads.

17.  Engagements

An Engagement Occurs When A Consumer Engages With An Ad, For Example, Viewing Or Clicking A Video Ad Or Showcase Shopping Ad, Or Expanding A Lightbox Ad, Gmail Ads.
Engagements Can Help You Understand How Well Your Ad Is Performing. Relevant, Highly-Targeted Ads With Attractive Content Can Encourage Viewers To Engage More Deeply With Your Brand.

18.  Engagement Rate

Engagement Rate Is Used To Measure How Often People Engage With Your Ad After It’s Been Shown To Them.
Use It To Help You Figure Out How Effective Your Ad Is. Engagement Rate Is The Number Of Engagements Divided By Total Impressions.

19.  Average CPE`

Aveage CPV (Video)Average Cost-Per-View (Avg. CPV) Is The Average Amount You Paid Each Time Someone Viewed Your Video Ad. It Equals The Total Cost Of All Views Divided By The Total Number Of Views.
This Differs From Maximum CPV, Which Is The Most You’re Willing To Pay For An Ad View.

20.  Conversions

Conversions Shows The Number Of Conversions You Received After Ad Interactions (Such As Text Ad Clicks Or Video Ad Views).
The Conversion Settings “Include In ‘Conversions’” And “Count” Affect The Number You See Here.

21.  Cost/Conversion

Cost Per Conversion (“Cost/Conv.”) Shows The Average Cost Of A Conversion. It’s Your Cost Divided By Your Conversions.

22.  Conversion Rate

If You Track Multiple Conversion Actions, Your Overall Cost Per Conversion May Be Lower Than The Cost For Each Conversion Action.
The Cost In This Metric Only Includes Ad Interactions That Could Lead To Conversions.

23.  Conversion Value

Conversion Value (Conv. Value) Is The Sum Of Conversion Values For Your Conversions. This Metric Is Useful Only If You Entered A Value For Your Conversion Actions.

24.  Interaction Rate

An Engagement Is Defined As Expanding An Engagement Campaign Ad, Which Is Done By Either Clicking On It Or Hovering Over It With The Mouse For Two Seconds
It Is At This Point That Google Will Charge You.

Ad Interactions As A Percentage Of Ad Impressions
Interaction Rate : Interactions / Impressions
The Interaction Rate Is An Aggregate Of Various Different Types Of Rate

25.  Engagement Rate

The Rate At Which Your Ads Are Engaged With After Being Shown To Users

Engagement Rate Calculated As No. Of Engagements / Views Of Ad

26.  Average CPE

This Is The Average Cost You Have Paid For An Engagement

Its Is Calcuated As ,Total Cost Of All Engagements / No. Of Engagements,

Lets See Now Some Important Formula For Our PPC Metrics

Cost Per Miles (CPM)

in a campaign, say an ad of 728*90 is running and the CPM is set 5 and the impression to be serverd is 2,00,000. 

what will be actual cost to the advertiser?

Cost to an advertiser

CPM*(impression/1000)

Total Number Of Impression Serverd

200000

CPM Set As

5

Cost To An Advertiser

1000 5*(200000/1000)

You Can Calculate CPM As Follow

CPM = (Cost To An Advertiser *1000)/Impression

Cost Of Advertiser Paying

1000

Impression Got

200000

Actual CPM

5 (1000*1000)/200000

Cost Per Click (CPC)

in a campaing having 300*250 size banner running at CPC of 2 and the number of clicks the ad has got is 1000, what it the amount that the advertiser has to pay actually

Cost To An Advertiser = CPC * Number Of Clicks

Number Of clicks

1000

CPC

2

Cost To Advertiser

2000 (1000*2)

You Can Calculate CPC As

Cost To An Advertiser / Number Of Clicks

Cost To Advertiser

2000

Number Of Clicks

1000

CPC

2 (2000/1000)

CTR

A campaign having 728*90 ad has serverd 10000 impressions and has generated 100 clicks so what will be CTR Of the ad?

CTR Is Calculated As

(Number Of Clicks/Impression)*100

Clicks Generated

100

Impression

10000

CTR

1 (100/10000)*100

CTR Means On Every 100 Impression There Is 1 Click

Conversion Rate (CR)

Conversion Rate Calculated As

(Number Of Conversions/Impression)*100

Conversion Made

20

Total Impression

1000

Conversion Rate

2 (20/1000)*100

Cost Per Action (CPA)

This Metric deals with any action like user signup or when any sale is made.

Supposed CPA is 5, The Number Of Impression Is 10000, CTR Is 3% And CR Is 2%

Cost To Advertiser Calculated As

CPA*(Impression*CTR*CR)

CPA

5

Total Impression

10000

CTR

0.03

CR

0.02

Cost To Advertiser Is Then

5 5*(10000*0.05*0.02)

Similarly,if we know the actual cost, we can easily calculate the CPA for the ad using following formula

CPA Calculated As

Cost To An Advertiser / (Impression*CTR*CR)

Cost To Advertiser

30

Impression

10000
CTR 0.03
CR 0.02

Then CPA Is

5 30/(10000*0.03*0.02)

eCPM (Effective Cost Per Mile)

eCPM is the actual CPM that is being applied, If the CPM set is 2 and the eCPM is 1.5, the net profit is 0.5. 

eCPM helps you measure how well your ads are preforming.

An ad size of 728*90 has delivered 213456 Impression and has also spend some 300 with CPM set at 1.5, What Will Be eCPM?

eCPM Calculation As

(Total Spent/Impression Delivered)*1000

Total Spent

300

Impression Delivered

213456

CPM Set As

1.5

Then eCPM

1.405441871

(300/213456)*1000

OR We can also calculate eCPM using eCPC, but for that we know the conversion rate.

eCPM Calculate as 

eCPC*Conversion Rate*1000

eCPC

eCPC is a metric used by internet markeers to calculate the effectiveness of their online campaigns when the rate model used is CPC.

eCPC can also be termed as “Profitable Per Click” so if the actual CPC is $2 and the eCPC is coming as $1 per click, the $1 is the profit on each click

eCPC Calculate as 

(total spend or revenue / Clicks)

Net Profit Calculated as 

(CPC – eCPC)

if eCPC needs to be calculated for a single Ad size say 300*250, we just need to figure out how much the ad size has spent and how much clicks it has generated, 

so if it is like $200 has been spent and the clicks generated are 100 with actual cpc set to $3.

 

eCPC =

(200/100) = $2

 

so Net Profit =

(3-2) = $1

eCPA

eCPA is the effective cost per action which is calculated the same as eCPC and eCPM, it is the total spend by the total number of actions (i.e. conversions) aquired. 

The total spent on the campaisn is $2000 and the total number of conversions made is 200, what will bte the eCPA?

eCPA Calculated as 

Total spent/number of conversions or actions

eCPC = 

(2000/200) = $10

Interaction Rate

Ad interactions as a percentage of ad impressions.

Interaction Rate = Interactions / Impressions

The interaction rate is an aggregate of various different types of rate.

if we have 200 interactions and 5,000 impressions, the interaction rate would be calculated like this: 

200 / 5,000 = 0.04 = 4% Interaction Rate

The interaction rate is an aggregate of various different types of rate as follows

Ads

Campaign Type

Interaction

Rate Metric

Calculation

Text Ads

Search & Shopping

Clicks

CTR

Clicks/Impression

Image Ads

Display

Clicks

CTR

Clicks/Impression

Video Ads

Youtube

Video View

View Rate

Views/Impression

Engagement Ads

Display & Gmail

Engagement

Engagement Rate

Engagements/Impression

Engagement Rate

An engagement is defined as expanding an engagement campaign ad, which is done by either clicking on it or hovering over it with the mouse for two seconds. 

It is at this point that Google will charge you.

Engagement Rate is

The rate at which your ads are engaged with after being shown to users.

If you had a campaign that received 100 engagements and had 10,000 views, we would calculate the Engagement Rate like this:

Engagement Rate Calculated As

No. of Engagements / Views of ad

Total Enagement You Received

100

Total Views For Your Ads

1000

Engagement Rate Calculated Ad

0.1 (100/1000)

What Is ROAS :

ROAS Determines The Average Return On Your Overall Advertising Spending.

Let’s Say You Currently Oversee An E-Commerce Site For The Online Movie Sales. To Help Get More Traffic, You Decide To Use Google Adwords. After Running A Few Campaigns, Your Traffic Levels Have Dramatically Increased, Now You Are Wondering Just How Successful Those Campaigns Were…

Let’s Assume That Your Campaigns Helped You Generate $12,000 Monthly. As Much As You Would Like To Advertise Your Business For Free, Every Medium Has A Price For Using Their Services.

So, Let’s Say That You Spent $3,500 On Adwords For Your Advertising Campaign. If You Were To Take This Information And Put It Into The ROAS Formula, Then You Would Get: 12,000 / 3,500 = 3.42

What Does This Mean For You? Well, It Means That For Every Dollar You Spent, You Earned $3.42 In Profit. Not Bad For Advertising On Just The One Channel.

What Is ROI:

Whether You Use Google Ads To Increase Sales, Generate Leads, Or Drive Other Valuable Customer Activity, It’s A Good Idea To Measure Your Return On Investment (ROI). Knowing Your ROI Helps You Evaluate Whether The Money You’re Spending On Google Ads Is Going To A Good Cause: Healthy Profits For Your Business Or Not

ROI Is The Ratio Of Your Net Profit To Your Costs. It’s Typically The Most Important Measurement For An Advertiser Because It’s Based On Your Specific Advertising Goals And Shows The Real Effect Your Advertising Efforts Have On Your Business. The Exact Method You Use To Calculate ROI Depends Upon The Goals Of Your Campaign.

One Way To Define ROI Is:

(Revenue – Cost Of Goods Sold) / Cost Of Goods Sold *100

Or
(Revenue-Expenses)/Expenses *100

Let’s Say You Have A Product That Costs $100 To Produce, And Sells For $200. You Sell 6 Of These Products As A Result Of Advertising Them On Google Ads, So Your Total Cost Is $600 And Your Total Sales Is $1200. Let’s Say Your Google Ads Costs Are $200, For A Total Cost Of $800. Your ROI Is:

($1200 – $800) / $800

= $400 / $800

= 50%

In This Example, You’re Earning A 50% Return On Investment. For Every $1 You Spend, You Get $1.50 Back.

Let’s Assume That Your Campaigns Helped You Generate $12,000 Monthly. As Much As You Would Like To Advertise Your Business For Free, Every Medium Has A Price For Using Their Services. So, Let’s Say That You Spent $3,500 On Adwords For Your Advertising Campaign. If You Were To Take This Information And Put It Into The ROI Formula

To Calculate ROI, You Should Use The Following Formula:

(((Turnover X Margin Rate) – Expenses) / Expenses) X 100

If We Were To Go Back To Our Original Example And Imagine That The Business Has A 20% Margin Rate, Then Our Formula Would Look As Follows:

(((12000 X 0.2) – 3500) / 3500) X 100 = -31.42%

Before We Get Into That, Let’s Define ROI. It Stands For Return On Investment. The Term Comes From The Finance World And Will Sound Familiar To You If You’ve Ever Taken Accounting. Strictly Speaking, ROI Is Calculated As Such:

(Profit – Cost) / Cost

The Sticking Point Comes In How Cost Is Defined.

Return On Ad Spend

When Most Advertisers Talk About ROI, They’re Actually Referring To ROAS, Or Return On Ad Spend. ROAS Is Simply PPC Revenue Minus PPC Cost, Divided By PPC Cost. It’s Usually Shown As A Percentage.

For Example, If Your Sales From PPC Are $1,000, And You Paid $500 For PPC Click Costs, Your ROAS Would Be 100 Percent:

($1000 Profit – $500 Cost = $500) / $500 Cost = 1.0 = 100%

The Beauty Of The ROAS Calculation Is In Its Simplicity. PPC Managers Can Often Perform The Calculation In Their Heads, Making It Easy To Perform Optimization On The Fly.

Many Bid Management Platforms Calculate ROAS And Use The Metric In Bid Optimization Algorithms. ROAS Is A Great Place To Start For Calculating PPC ROI.

Return On Investment

If You Look Up The Definition Of ROI, It Looks A Lot Like The Definition For ROAS: Profit Minus Cost, Divided By Cost. The Difference Is In How Cost Is Calculated.

PPC Click Costs Aren’t The Only Cost To A PPC Campaign. In Ecommerce, There Are Costs To Make The Products And Fulfill The Orders. There Are Credit Card Processing Costs And The Cost Of Returned Goods. You Also Have Customer Service Costs – The Salaries Of The People Who Answer Phone And Email Inquiries.

Even In Lead Gen, Where You’re Not Selling Physical Products, There Are Still Costs. Consider Fixed Costs Such As Those That Keep Your Website Running: Servers, Equipment, And Technicians. What About The Salaries Of The Salespeople Who Follow Up On All Those Leads? What About The Cost For Marketing Automation?

That’s All About You Need To Take Care And PPC Metrics In Your Ad Campaign

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