Adwords Quick Overview
Introduction
The primary unit of measurement for all Adwords campaigns are conversions or desired actions or outcomes (i.e. a sale, specific action or lead). A conversion is counted when a customer reaches a specific page on your website (i.e. the “payment success page” after a purchase, or a “Thank You for scheduling a free home consultation” confirmation page). The Adwords account control panel provides critical information measuring the effectiveness of all campaigns along with their respective subordinate ad groups.
Each Adword initiates a mini-sales process, so the main factor influencing conversion rates will be the “landing page” destination of the Adword. Good landing pages capture attention while convincing a visitor to perform a specific action. Poorly designed landing pages are a serious drag on campaign cost effectiveness, so they must be assembled and refined as part of the overall Adword campaign strategy. For companies subcontracting Adwords campaign management to 3rd parties, omission of landing page design, monitoring and refinement in client strategy deliberations is therefore an obvious red flag.
Component Breakdown
Campaign
The basic advertising unit in Google Adwords where you set your daily budget and type of campaign. Data can be aggregated at either the campaign level or the ad group level (which are collections of ads tied to the campaign settings and budget).
Conversions
The desired action and primary reason for using Adwords (with the exception of a branding campaign and search engine visibility for low-traffic keywords).
Impression
How many times your ad is actually shown
CTR (Click Through Rate)
The number of clicks your ad receives divided by the number of times your ad is shown. Used to measure how often people click on your ad after it’s shown to them (used to help determine effectiveness of ad).
Average CPC
As cost per click fluctuates due to bidding methodology (when you pay less than your bid), this is the average cost of each click. Cost = (Number of clicks) X (Average CPC).
CPC (Cost Per Conversion)
Cost of all the ads ran in the campaign divided by the amount of conversions received.
Conversion Rate
Percentage of clicks that resulted in conversions.
Average Position
Where your ad is showing on Google (top position is “1”)
Landing Page
Target link of the Adwords Ad