Measure Ppc Advertising

Posted by Nick Niesen on November 1st, 2010

The efficiency of any program, plan or campaign is known by the results it achieves. The result of a PPC advertising campaign would be to increase the sales of the products/services it advertises. It is said in Quality Management, ?If it can?t be measured, it can?t be achieved?. So the advertiser would have to measure the results to know the success of his program and therefore to take actions based on that.

The goals of an advertisement can be increased number of customers, higher dollar value of sales, requests to subscription of a service or just sharing personal data. The advertiser should be clear about the goals he/she sets out to achieve. Properly articulated goals, followed by well-crafted advertising campaign and periodic measurement of the result would complete the loop of an advertising campaign.

The metrics for measurement are Return-on-Investment (ROI) at the business level, cost per acquisition (CPA) and click-thru-rate (CTR). ROI measures the returns on the advertising budget; CPA measures the cost of converting a viewer/user to a customer; and CTR measures the number of visitors to the website. With increasing bidding prices for keywords, along with the heightened competition to remain at the same ranking, the numbers derived from these metrics become significant for the advertiser to take action upon modifying the campaign, etc.

There are software tools available to track the number of visitors clicking through. ROI and CPA can be measured from the actual sales figures and the advertising dollars spent. A word of caution to the advertisers: it would be myopic to look just at the numbers and miss the whole picture. For instance, a high click-thru-rate may be due to various reasons like fraud, etc and hence CTR has to be correlated to other metrics like CPA and ROI in order to get the real meaning.

With an average online conversion rate of around 2%, an online advertiser has to tightly utilize budget by continuously taking action on the measurements without which, the advertisement would be pulled off the portal where it is hosted, resulting in the loss of business.