SMART PPC Goals: How to Avoid KPI Red Flags & Low ROI
Google answers over 40,000 search queries, every second of the day- totaling 3.5 billion searches daily. Of those, AdWords Advertisers generated $14 billion in ad revenue in 2014.
Paid Search campaigns with obvious errors, holes or a lack of optimization could be draining profitability from your search campaigns, negatively impacting your digital presence and slowly sinking your PPC performance.
Define SMART PPC Goals:
Unclear, fluctuating, or un-SMART (Specific, Measurable, Achievable, Realistic, Timely) goals are less likely to correlate with success across all aspects of marketing including paid search.
Outline and audit your PPC goals before you launch a campaign, and regularly regardless of the longevity of your paid search campaigns.
What should my PPC KPI’s be?
If you don’t have clearly outlined PPC KPI’s, take the time to outline specific goals for your paid search campaigns.
Even if you have clear Paid Search goals, it’s always valuable to revisit them to ensure that they are being met, clearly communicated, tangible and specific. Consider creating multiple sub-PPC goals and metrics for success for individual campaigns and product groups.
Effective PPC goals will provide a clear road map for your paid search campaign that aligns with your online store capabilities and priorities:
- Grow orders – ex. Increase order volume (for product group(s) H, I, J) by 10-20% YOY
- Better Branding– ex. Increase ad impressions (for ad campaign A &C ) by 30% this quarter
- Increase Spend Efficiency – ex. Maintain 20% ROI on (PPC ad campaign A), Increase ROI for best seller groups Y &Z for Q3, etc.
Choose Attainable KPIs
If we already have 100% impression share for every single query related to “levis” then setting a goal to increase levis sales by 20% year/year probably isn’t attainable. In addition to setting defined PPC goals it is also important to take notice of KPI indicators that likely mean your PPC campaigns are leaking profitability.
PPC KPI Red Flags:
Return on Investment (ROI) and Cost per acquisition (CPA) don’t align with your goals – The beauty of SMART PPC goals is that they are attainable. If your goals don’t match your current metrics- there is either a problem with your goals or with your campaign strategy.
A low ROI or high CPA is likely indicative of issues elsewhere in your account- bidding too high or low, clunky account structure, or another variable which is preventing your paid search campaign from being profitable.
Poor Conversion Rate (CR) – Conversions are a leading indicator of paid search campaign success. If your conversion rate is low- something is definitely wrong. It may be a slow season, or possibly one of your competitors drastically reduced prices- but the most common issue is probably the obvious one – the structure, quality and management of those paid search campaigns.
Low conversion rate is most likely due to the quality of traffic being driven. Account structure, lack of negative key-wording, poor landing pages and/or a bad checkout process can contribute to this. Lower conversion rate is indicative of campaign mismanagement, but also carries with it additional negative campaign repercussion including lower quality scores, overpaying for CPCs and ad position, and costly clicks from ads being served to irrelevant search queries.
Goal Completions – Whatever your PPC goal is- purchase transactions, form fill-outs, email sign ups, downloads,etc. goal completion success is an indicator of overall campaign success. If your ads aren’t generating sales, downloads, etc. they aren’t fulfilling their primary objective. Low goal completions are likely due to faulty campaign structure, management, or other fixable PPC campaign elements.
Poor Click Through Rate (CTR) – Paid ads are designed and promoted to be clicked on. Impressions lead to clicks, which ideally translate to sales for your online store. Click through rate is a factor which coupled with sales and other revenue metrics is indicative of success.
As with all success metrics, consider click through rate alongside your goals and impacting metrics. High click through rate on its own doesn’t mean your campaign is performing successfully. Click through rate needs to be combined with profitable or well converting campaigns for PPC success. For example, a product/campaign that historically doesn’t convert well for you isn’t actually a problem.
Limited Impression Share – Limited impression share is a marker that your paid search campaign has room for growth. Your PPC campaign isn’t hemorrhaging money, but you are missing out on impressions- which means you’re missing out on potential sales and revenue.
Low impression share is only an issue for campaigns/keywords that are profitable/converting well. If they aren’t then it’s a non-issue.
This measurement is reliant on the match of the keywords in said campaigns which can impact the insight from this metric. For example an exact match campaign for our best sellers might be targeting a 100% impression share (because it’s profitable). However a broad match campaign for the same products might target 30% because the objective of the broad matches is discovery rather than capitalizing on proven profitable keywords.
Low ROI – Advertising costs should directly correlate with your profit margins. Established ROI goals should be met to maintain profitability. You need to make sure that the revenue from a potential order justifies the associated advertising cost. For example, you wouldn’t maintain a $0.50 cent bid on a $2 product.
Monitor your ROI across all of your campaigns, and on a holistic level. If you’re not meeting ROI goals across the board of for individual campaigns consistently, its likely an indicator that there is room for improvement. And it means that you’re losing profitability.
You Might Be Interested In
