This is a guest post written by Elisa Gabbert. Elisa is the Content Development Manager at WordStream Inc., a provider of search marketing software and services. She manages the WordStream Internet Marketing Blog and you can follow her on Twitter at @egabbert.

If you manage a Google AdWords account to supplement your organic search engine optimization efforts, you know there are a ton of metrics available to track and analyze, and it can quickly get confusing and overwhelming. Since we all have limited bandwidth, it’s a good idea to narrow down the field to a short list of key metrics that really give you meaningful insight into what’s working -- and what isn’t -- in your paid search campaigns.

These five metrics will give you the most bang for your buck. I’m not saying you should ignore all the other available metrics.Free Guide, Template & Planner: How to Use Google Ads for Business

But if you have limited time, these will give you a great overview of your performance, and tracking these five metrics over time will provide a solid measure of your success.

#1: Quality Score

Quality Score is Google’s measure of the relevance of your keywords, used to ensure that searchers see relevant ads and have a positive experience. The factors that determine your Quality Score include:

  • The click-through rate (CTR) of the keyword and its corresponding ad
  • The relevance of the keyword and ad to the search query
  • The relevance of the keyword to its ad group
  • The CTR of the display URLs in the ad group
  • The quality of your landing page

It’s important to maintain good Quality Scores because Google uses them to determine your ad rankings as well as how much you pay per click. Even if you think you’ve dotted your i’s and crossed your t’s when it comes to keyword research, campaign structure, and ad text optimization, low average Quality Scores are an indication that you’re missing some piece of the puzzle.

#2: Click-Through Rate

Recently, I asked 17 PPC experts to tell me the top three PPC metrics they pay the most attention to when analyzing their AdWords accounts. Click-through rate was the #1 most common answer. CTR is important for several reasons, among them:

  • It’s one of the most important factors in determining your Quality Scores
  • It tells you whether or not your ads are relevant to searchers

Low click-through rates are a sign that either your keywords or your ad creative (or both) need improvement.

#3: Conversion Rate

Another very popular answer in our PPC metrics interview, conversion rate tells you how many people who clicked your ad went on to complete the desired action on your landing page, whether it was making a purchase, signing up for a free trial, or filling out some other kind of form. Conversion rate is just as important as click-through rate – you don’t want to pay for tons of clicks and traffic if none of that traffic ends up taking a meaningful action. Strong conversion rates mean that the money you spend per click is coming back to you in profits (that’s what we call return on investment, folks).

#4: Cost Per Conversion

As Joe Vivolo of KoMarketing Associates put it, “This obviously is the number that makes or breaks a campaign from a success/failure standpoint.” In other words, if you have to pay more to gain a new customer than that customer is actually worth to your business, then your campaign is failing; you haven’t attained a return on investment.

#5: Wasted Spend

Wasted spend is a measure of how much money you’re essentially pouring down the toilet by paying for clicks that don’t convert. In other words, it's an ROI killer. The best way to reduce your wasted spend is through smart use of negative keywords. Negative keywords allow you to filter out traffic that is irrelevant to your business and unlikely to convert. By creating a negative keyword, you’re preventing your ads from displaying for search queries that contain that keyword. Bidding on non-converting keywords is a waste of your marketing budget.

How Does Your AdWords Account Stack Up?

Want a quick way to check your performance for key metrics like these? The AdWords Performance Grader is a free tool that performs an instant PPC audit on your AdWords account, comparing your performance in areas like Quality Score and wasteful spending to other advertisers in the same budget range. It’s an easy way to see how you measure up to competitors and to benchmark your campaigns so you can track changes (hopefully improvements) in your results over time. (And as a bonus, the AdWords Performance Grader is now available to HubSpot customers in the HubSpot App Marketplace.)

Are you using these key metrics to measure the performance of your PPC campaigns? What other metrics do you find particularly useful?

Image Credit: David Oliva

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Originally published Oct 10, 2011 11:30:00 AM, updated January 08 2020