Running Google Ads can be a game-changer for businesses, but to get the most out of it, tracking and understanding the right metrics is critical. These key performance indicators (KPIs) help you evaluate the effectiveness of your campaigns and make sure you're getting the best return on your investment. Let’s break down the most important metrics you should be monitoring.
1. Return On Ad Spend (ROAS)
ROAS is one of the most important metrics when it comes to Google Ads. It measures how much revenue you’ve earned for every dollar spent on ads. Essentially, ROAS compares your ad spend to the sales generated as a direct result of those ads.
If you're spending $1,000 on ads and making $5,000 in revenue, your ROAS would be 5:1. This metric provides a clear indication of whether your ad campaigns are profitable and can help guide decisions on scaling budgets or adjusting strategies. Tracking ROAS is essential to ensure that your ad spend is generating a meaningful return.
2. Cost Per Click (CPC)
Cost per click refers to the amount you're paying each time someone clicks on one of your ads. It's a key component of Google Ads, as it directly influences your ad spend and the number of clicks you're able to drive within your budget.
CPC gives insight into how competitive your keywords are and how efficient your bidding strategies are. Lowering your CPC without sacrificing the quality of traffic can significantly improve your ROAS and overall campaign performance.
3. Average Order Value (AOV)
Average Order Value (AOV) measures the average dollar amount spent each time a customer places an order. AOV is an important figure when considering your overall marketing strategy. A higher AOV means you need to win fewer purchases to have a better ROAS.
AOV can be influenced by site promotions, such as offering free shipping or discounts, which can incentivize customers to spend more. If you're running a specific promotion intended to increase purchase amounts, monitoring AOV becomes crucial. If AOV rises during a campaign, it’s a good sign your promotional strategy is working.
4. Total Sessions and Traffic Sources
Knowing how many total sessions your site is getting and where that traffic is coming from is vital for understanding the bigger picture of your digital marketing strategy.
While Google Ads can drive substantial traffic, relying solely on ads is not sustainable. Ideally, about 30% of your total sessions should come from ads, with the remaining 70% coming from organic search, email marketing, social media, or direct visits. This balance ensures that you're not over-reliant on paid channels and that your marketing efforts are diversified.
5. Returning Customer Rate
While acquiring new customers is important, returning customers provide long-term value. The returning customer rate measures the percentage of customers who come back to make another purchase after their initial one.
Focusing on the lifetime value (LTV) of a customer rather than the initial acquisition cost is key to long-term growth. While it’s normal to see the returning customer rate drop temporarily as you bring in new customers, the goal is to have a solid percentage of customers who first found you through ads return and continue purchasing, increasing their lifetime value. High customer retention is a sign that your ads are attracting loyal customers who are worth the initial investment.
To Wrap It Up
These key metrics provide deeper insights into how well your ads are performing and how you can optimize your strategies for the best possible outcomes. By paying attention to these key metrics, you’ll be able to fine-tune your campaigns, maximize profitability, and achieve sustainable growth.
Ready to get started with Google Ads? Contact us at Good Commerce!