Google AdWords Workshop – Part 1:
Goal Definition & Key Performance Indicators

The following article is part 1 in our series on running your own pay-per-click advertising campaign with the Google AdWords program. If you are new to AdWords, read the introduction here first.

The first step in any advertising campaign should be to ask yourself what it is that you’re trying to achieve. When you know that, you can define campaign goals and plan your campaigns accordingly.

For some advertisers, particularly those in the service sector, the most appropriate goal will be to generate new sales leads.

Marketing professionals will often express that objective in terms of generating a specified number of leads during a given period, at a target cost per lead.

In this context, the cost component is the cost of advertising with AdWords.

The mechanics of generating leads online might be as simple as encouraging visitors to pick up the phone or send you an email. But it’s also common to ask visitors to fill in a form to receive a free report, request a call-back . . . or sign-up for a newsletter.

In the world of direct response advertising, each of those actions is called a ‘conversion event’. A visitor ‘converts’ when they take the action you are trying to encourage . . . to complete that registration form for example.

For other advertisers, the goal will be to generate direct sales. And that can be expressed in a similar format . . . for example, to generate a specified number of orders during a given period, at a target cost per order.

The conversion event in a sales scenario is obviously the placement of an order on your web site. The number, value and unit cost of these conversion events become what are known as ‘key performance indicators’ which can be tracked and measured against budgets established for that purpose.

Other key performance indicators that you’ll want to track include:

  • Number of ad impressions
  • Click-thru-rate
  • Rate of conversion

The number of impressions is the number of times your ad is displayed.

The term ‘click-thru-rate’ refers to the number of clicks your ad receives as a proportion of the number of impressions.

That’s obviously an important number in any pay-per-click campaign . . . but as we’ll see later, this metric takes on extra significance with Adwords because of the way Google uses it to rank and position ads.

If you’re tracking purchases, the ‘conversion rate’ is the number of sales you make expressed as a percentage of the total number of visitors that clicked through to your site via an Adwords ad. Again, this statistic will become a crucial indicator of your ability to reach your goals.

Aside from the objectives I’ve just mentioned, your AdWords campaign can also be used to pursue other more general marketing goals as well.

For example, you may want to protect market share by making sure your competitors don’t have free rein in the pay-per-click channel. You may have branding objectives, such as exposure to search users in the research phase of the buying cycle, not just when they’re ready to buy. Or perhaps you need to drive sales leads to reseller distribution channels.

Goals like these can be harder to quantify and measure, but that doesn’t mean they’re not valid objectives.

I’ll talk more about campaign objectives and key performance indicators in later segments, but in the next post we’ll continue the planning and preparation phase by talking about how an AdWords account is structured and the best ways to organize your campaigns.

Gary Elley

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