Welcome to the first in a series of blog posts, where we aim to demystify Pay Per Click.
Like most industries, performance marketing has a lot of acronyms. Performance marketing is commonly known as PPC (pay per click). Pay per click, is exactly what it says on the tin – you pay for a click on your Ad. However… this is just the beginning of the jargon, get ready for a rollercoaster of acronyms (and add this page to your favourites, it will come in use down the line!)
CPA – Cost Per Acquisition
What does it mean?
The CPA tells us how much we paid for a conversion or meaningful action. It is calculated by dividing the total cost of conversions by the total number of conversions.
Why do we use it?
This helps us understand the efficiency of the campaigns. The aim is to minimise how much we pay for a customer.
Anything special with this metric?
When you want to scale your campaigns and grow the reach, the CPA will go up.
Match Type
What does it mean?
Keywords are words or phrases that are used to match ads with the terms that people are searching for. The keyword match types dictate how closely the keyword needs to match with the user’s search query so that the ad can be considered for the auction.
Why do we use it?
To dictate how specific or loosely related search terms can be to trigger our Ads.
Anything special with this metric?
There are three match types: Broad, Phrase and Exact
CPC - Cost Per Click
What does it mean?
Cost-per-click (CPC) is the amount that you pay whenever anybody clicks on your Ad.
Why do we use it?
Your CPC is an important metric because those clicks, and costs, add up fast. If your CPC is too high, you won’t be able to achieve your goals. If your CPC is too low, you won’t show to people.
Anything special with this metric?
The CPC isn’t set randomly but it is dictated by competition, value of the goods and lots of different external factors. If you use smart bidding, you don’t set the CPC.
CTR - Click Through Rate
What does it mean?
CTR is the click through rate. This is a measurement of the percentage of people who clicked on your Ad after seeing it.
Why do we use it?
We use CTR to see which ads and keywords are successful and which need to be improved. If only a small percentage of people who see your Ads click on them, we know that they need improving.
Anything special with this metric?
A high CTR is a good indication that users find your ads interesting and helpful. We can also use it to find out if our keywords are showing to the right people.
ROAS - Return on Ad Spend
What does it mean?
Return on ad spend (ROAS) is a metric that measures the amount of revenue earned for every pound spent on advertising. For example, if you spend £100 on Ads and get £500 in sales, your ROAS is 500%. If you spend £26 on Ad spend and get £91 worth of sales, your ROAS is 350%.
Why do we use it?
For businesses where the goal has value, this helps us to see the efficiency of the campaigns.
Anything special with this metric?
ROAS is different to ROI. ROAS just covers the Ad Spend but ROI is different as includes management fees or any other investment. ROI will always be less than ROAS.
SQR - Search Query Report
What does it mean?
An SQR is a search query report. This is a review of all of the search terms that have triggered our keywords and resulted in our Ads showing. We use different match types to find new and different keywords, however, sometimes these are not relevant.
Why do we use it?
We use this to exclude irrelevant keywords that are triggering our Ads and wasting Ad spend.
We’ve covered the most commonly used jargon but if there are any other terms we use that you’re not familiar with, let us know and we’ll happily update this post accordingly.
