All about KPI’s
Online marketing is all about TLA’s (three letter acronyms).
KPI – An Introduction
KPI stands for Key Performance Indicators. It is vital determinant in determining the success of your company. Some common examples of KPI’s are CPL (cost per lead) and ROAS (Return on ad spend). They are categorized under “terminal metrics”.
If your budget is huge then you can alternatively look at total leads or total profit. The more clicks you tend to convert, the lower is the CR. This may lead to lower ROAS but total profit and long term goals could deviate.
Metrics not used as KPI’s
Some unworthy KPI’s are CPC (Cost per click), CTR (click through rate) and CR (conversion rate).
The above KPI’s, called “midstream metrics” are not up to the mark because they tend to measure the happenings in the middle of converting prospective findings and not at the end. However there are situations where the “midstream metrics” can be used. If you are trying to lengthen videos on a landing page, you can calculate the time spent on the particular page and optimize keywords accordingly.
Some other suboptimal KPI’s
CPC do not matter at all if you’re CPL and ROAS are on good grounds. No one cares if you lower bids or set position preferences to reduce CPC. You can post better ads and increase your CTR on the cost of CPC.
CTR matters a little. If your CTR is not high enough then your quality score is the sufferer and your CTR inflates unalarmed. Highest CTR advertisement is not always the best. Ads which are unqualified may get more clicks due to their sheer quality. There are ads which affects both your CTR and CR to deliver optimal CPL and ROAS. If your overall CTR scale rises too high then after a point, your CR falls and your overall results get affected.
CR is not an eligible PPC metric. Sending incorrect prospects at incorrect landing pages can make your CR suffer. Actual CR problems constitute web design issues, copywriting problems, usability problems and also self recreating troubles. For some unknown reasons, clients do not want conversion optimization and they do not tend to understand it. You urgently need to fix your sales problems at first if your sales are not optimized.
Pass all your ads and keywords through the KPI test
After establishing your KPI, if you do not optimize them then you cannot improve your results.
Optimizing CPL is easy because it is shown everywhere in AdWords. The same is not applied for ROAS as you have to get it from Report Center. This is popularly termed as “value/cost” in AdWords.
Clients are generally ignorant of the profitable keywords and hence they misuse loads of money and hence this affects the overall profits.
One important thing to remember is that ROAS comprises of CPC, CR and average sale amount. If you are evaluating ads only on the basis of CTR and CR then you are actually missing out on essential keywords which have higher sales than others. You need to generate Ad Reports and AdWords Keyword to compare ads on basis of ROAS.
CPL is not a perfect KPI. It’s great if you have leads as your goal. You need to resort to a CRM (like Salesforce) to gain access to quality leads generating more sales.
