Search engine marketing is increasingly adopted in companies of all sizes, be it large branded MNCs to small SMEs. Therefore, it is useful that no matter which function of the company you are in, you could tune in to the metrics that search engine marketing uses to quantify marketing performance. For those of you who are new to digital marketing and are interested in this career, in particular search engine marketing, this article would be extremely useful to you. In this article, I would be diving in to the nine search engine marketing metrics that you need to know.
I would not be going into the simpler terms like impressions, clicks and cost in this article and would go into deeper but common metrics like CTR, CVR, CPA or CAC and ROAS. I would share about the commonly used acronym of the metric, the long-form of the acronym, how you calculate it and why it is useful in business context.
1. CTR: Click-through Rate
How to Calculate: Number of Clicks/ Number of Impressions
Why it is useful: The higher, the better. Knowing the CTR would allow you to know how relevant your ad copy is written, as well as how well you are using your ad assets like ad extensions. It also tells you about how relevant your ad copy is in relation to the keyword.
2. CPC: Cost Per Click
How to Calculate: Cost/ Number of Clicks
Why it is useful: The lower, the better. The CPC of a keyword or the average CPC of a campaign tells you how much it costs for each click for a keyword or a group of keywords. How much a click costs on average depends on a number of factors, such as the number of competitors in the scene bidding on the same keywords, which increases the CPC of the keyword, especially keywords generic to your industry, since you are bidding in a virtual auction.
How to Calculate: Not so much of calculation but about how you define what is a conversion depending on your campaign goal. Your conversion could be defined as an email subscriber, an order, an app install, or a new customer sign-up.
Why it is useful: The number of conversions should be the top or the top 3 goals of your campaign. This metric is mostly why you are optimising your campaign for, as whether it is for the short term or for the long term, it would mean more sales for your company.
4. CVR: Conversion Rate
How to Calculate: Number of Conversions/ Number of Clicks
Why it is useful: The higher, the better. This metric is an indication of how well your landing page is performing. When a customer clicks on your ad, your customer would be led to your landing page. The number of conversions you can bring in, out of the total number of clicks for the campaign would depend on how inclined your customer is to convert on your landing page. A high CTR and a low CVR would usually mean that while your ad copy is good, your landing page needs improvement.
5. CPA or CAC: Cost Per Acquisition or Customer Acquisition Cost
How to Calculate: Total Cost/ Total Number of Conversions
Why it is useful: The lower, the better. This should be one of your top metric to focus while optimising your campaigns. This metric means how much it costs to bring in one conversion. Depending on the conversion you are using, it could also be CPO (Cost Per Order) or CPI (Cost Per Install).
6. ROAS: Return on Advertising Spend
How to Calculate: Revenue Generated from a Campaign/ Cost of a Campaign
Why it is useful: The higher, the better. This metric tells you how much revenue your campaign generates for each dollar of advertising spend. It is important in advising your clients, your company stakeholders or your bosses, about the budget allocation for the quarter or for the year and letting them know whether it is worthwhile to invest more money into your advertising campaign or to other marketing channels.
7. Share of Cost:
How to Calculate: Cost of a Campaign or Keyword/ Cost of a larger group of Campaigns or Keywords
Why it is useful: This metric allows you to understand how much a particular campaign or keyword is spending relative to other campaigns and keywords in your account.
8. Share of Conversion
How to Calculate: Number of Conversions for a Campaign or Keyword/ Number of Conversions for a larger group of Campaigns or Keywords
Why it is useful: This metric allows you to understand how much conversions a particular campaign or keyword is bringing in relative to other campaigns or keywords in your account. You should use this along with Share of Cost, to know whether a campaign is costing too much but bringing in too low a share of conversion.
9. Search Impression Share
How to Calculate: According to Google AdWords, Impressions/ Total Eligible Impressions
Why it is useful: The higher, the better. Your search impression share of a keyword is how much impressions your keyword is bringing in given your max bid assigned to your keyword, over the total eligible impressions of the keyword should you be at the top of the auction for the keyword. It depends on mainly two factors, how many competitors are bidding for the same keywords and how much you are bidding on the keyword.
I hope this article about search engine marketing metrics is useful to you. Let me know what other topics about search engine marketing you would like to me to share and I would be happy to write an article about it. Thanks for your time!
About the Author: Bryan Ong
Bryan is currently a digital marketing manager focusing in Singapore and global (US, Australia, Dubai) markets and has proven in his career to overachieve targets greatly while maintaining CPA efficiency. His specialities are SEM, SEO, Facebook Marketing and Content Marketing. He is also awarded a government scholarship, is a published author of a motivational book and a TEDxSingapore speaker.