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Whats your KPI?

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# 1
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Hi all,

 

I'm curious to how you measure the performance of you Adwords accounts? Do you use CPA, ROI or other KPI's?

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Re: Whats your KPI?

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# 2
Top Contributor

Hi SanneB,

 

You're getting the age old response here...It depends.

 

The answer to this really lies within the business and account goals. There are so many possibilities and variables that come into play so there is no formula that fits all.

 

Some businesses are very high level while others are extremely granular. These are just two basic scenarios (out of MANY) where KPI's would be very different.

 

I see ROI thrown around quite a bit and the reality is true ROI needs to account for many factors that often, agencies and even the business itself, aren't equipped or educated enough to reach those calculations. For instance, in an e-commerce environment, to start, you'll need margins on every product (actual cost to produce and the markup) as well as tracking from initial touch to final sale while being able to properly attribute that sale back to accurate sources. Then you have to account for discounts, management fees, etc...it's no easy task, especially when you add in potential sales that originated in ad clicks but closed over the phone.

 

I think, more commonly , when people say ROI - it appears to me that they're referring to a return on ad spend, and nothing more - a simple, you spent $X and got $Y in revenue...which unfortunately doesn't give us too much insight into profitability.  A $1000 ad spend that generates $2000 in revenue seems ok until you factor in that the profit margins on those sales were only 25% and then adding in a management fee, all of a sudden, you're working in a money losing space.

 

On the flip side, with no insights into deal closings, a client who is looking for leads, may only be concerned with having a steady stream and volume of leads as well as a target CPL/CPA.

 

In a perfect world, ROI is ideal, but in reality, we do our best to present the KPI's that matter most to our clients and that's what we optimize for.

 

Do you have business examples you'd like to explore further? Having more details about something in particular would offer us much more to reflect upon.

 

My couple cents. Smiley Happy

 

-Tommy

Tommy Sands, AdWords Top Contributor | Community Profile | Twitter | Philly Marketing Labs
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