How to Lose Major Profits by Using the Wrong PPC Metrics

I recently started with a new client who coordinates florists across Australia. He has been doing his PPC management himself for several years, and really had done a pretty good job.

Always looking for improvement and more profit though, he came to me.

One of the first things I noticed in reviewing all his ads- both deleted and active- was that some of his most profitable ads had been deleted.

In one adgroup, he had made more than $132,400 in revenue from his active adgroups. If he had run his best one all that time though, he would have made more than $444,600. That's 335% more. You see, one of his active ads made one-third the revenue of the other, and it made only 13% the revenue of the best ad.

And I could see why he had missed the best ads...

The ads he had kept got higher CTR (click through rate) than the more profitable ads.

Huh? How is that possible?

Well, CTR only gets the prospect to your landing page. Then you have to sell them. The figure that reflects that is CR (conversion rate). Conversion rates for ads are not reported next to the CTR in the AdWords interface. You have to ask for that info in the Report Center.

When you multiple CTR * CR, you get the % of people who see the ad that end up buying. You lump the efficiency of the entire process together and you get sales per impression.

Since CR varies with the ad, we know that what is in your ad affects whether you get the sale or not. This could be because of the power of the ad itself, or how well it fits with your landing page and sales process.

You can't ignore CR.

And you can multiply your average order size by your sales per impression to get your estimated revenue per impression. These last two are the numbers you should compare ad quality on, not merely CTR.

Knowing your metrics and using the right ones are crucial to making evaluations about keywords and ads that increase profits.

Brian B. Carter, MS is a San Diego e-business, copywriting, and adwords consultant. He's an AdWords Qualified Individual who achieves exceptional results for his clients... increased profits, ROI, and new customers.

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