3 useful metrics to gauge your SEM success

Unless you know how to measure the performance of your search campaigns and then tweak them to match your business goals, a so-called digital marketing agency can fool you any day.

Having the right keywords connected with compelling ads is just the beginning; you need to track your progress and know which levers to pull up and down continuously for optimisation. Having a clear goal attached with your campaigns, with well defined tracking metrics, will let you know exactly which campaigns are making the P&L sheet ring and which are duds.

Generally, the high level goals of SEM are:

1. Generating Leads
2. Driving Purchases
3. Building Brand Awareness

For example-

• If you want people to inquire about your service, your SEM goal will be Generating Leads.
• If you want to sell more books online, your SEM goal will be Driving Purchases.
• If you want people to know about your business, your SEM goal will be Brand Awareness.

What to measure

You may want to achieve all three goals at once, but it is best to focus on a single goal and its key metrics at a time.

• For Lead Generation - Measure CPL (Cost Per Lead)
• For Driving Purchases - Measure ROAS (Return on Ad Spend)
• For Brand Awareness - Measure Unique Visits or Reach

Lead generation - CPL

Let's assume a real estate developer wants to generate leads using a form on his landing page.

A simple formula he can use is -

Money spent on ads/number of leads = CPL

For example - If the builder spends Rs 58,294 on an SEM campaign in a month, thanks to which he receives 4,489,576 views, with 13,394 people clicking on the ad and visiting the website page, and 103 people finally filling out the inquiry form, the CPL will look like-

Money spent on ads (58,294)/Number of leads (103) = CPL (565)

The screenshot below shows Cost/Conversion, i.e. your total cost divided by your conversions. Cost includes the cost for interactions that can lead to a conversion, and conversions include only those conversion actions that you've chosen to include.

Here, conversion is form filling, hence lead capturing.

If the developer has CPL targeted at Rs 3,000, he can track which campaigns are generating positive results and which are not, and act accordingly.

This can be used to deep dive into ads and keywords that are helping in lead generation, boosting them accordingly, and discontinue the exploration of those avenues that are not meeting expectations. This enables an organisation to get more optimised results.

Driving purchases - ROAS (Return on ad spend)

Let's assume that an online bookstore wants to sell more books to increase its revenue. To measure SEM success, they can use -

Revenue/Money spend on ads * 100 = ROAS percent

For example - They spend Rs10,000 on an SEM campaign and receive 6,000 views, 200 people clicking and visiting the website. Out of these 200 visits, 40 people buy books. The revenue from these sales is Rs 18,000.

The ROAS will look like -

Revenue (18,000)/Money spend on ads (10,000) * 100 = 180 percent

For Brand awareness - Unique visits or Reach

Here you can skip adwords and check with tools like Analytics to measure success.

Using Google Analytics, we can know exactly how many unique visitors came to the site and what the behaviour flow on the site was.

Conclusion

Now that you know which metrics you should be worrying about most while interacting with your agency, they can't fool you anymore. The metrics above give you key insights into the effectiveness of your digital strategy, helping you optimise your operations considerably. Make sure you have your goals well-defined so that you can tie them up with your campaigns and measure progress with these metrics.

Good luck, and do let us know how SEM metrics are going for you.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)