Which Metric is Best?

I have heard in the past that if you have to answer the same question more than twice, you should blog the answer. The reason for this is fairly simple – if it’s useful for two people, there is a very good chance that it will be useful for many more.

Time and time again I have been asked by various coworkers, colleagues or clients: “Which metric is the best for measuring success on paid search?” While this question is valid for any marketing channel, I most frequently hear it in paid search – few other channels can be measured in so many ways.

PPC has a lot of options for tracking success. The engines give you a wealth of data – not surprisingly designed to help you spend more money and push more traffic. Your own analytics package (whether that be free like Google Analytics, the full Omniture suite, or anything in between) can get you more data on the behavior of your site’s users than you could ever dream of sorting through.

Before I get to answering the question, let’s take a look at what makes a great one. In a timeless article by Avinash Kaushik (Analytics Evangelist at Google), he illustrated 4 attributes of great metrics. I know the article is absolutely ancient (over three years old!) but the information is still really relevant today.

Four Attributes of Great Metrics

  • Uncomplex
    Everyone who receives the number must be able to make sense of it with minimal explanation. Don’t break out the AP Calculus from high school – Keep it simple.
  • Relevant
    Every business, website, and PPC Campaign is different and should be measured differently. Notice I didn’t say PPC Account – I said Campaign. Different keywords should have different goals (branded vs non-branded for example) and therefore different metrics.
  • Timely
    If you have to wait 48 hours to get the data, you are waiting too long. You don’t need to have your data processed in real time, but if you can’t get it by noon the following day, find a metric you can.
  • Instantly Useful
    This is probably the most important of them all, in my opinion. If you can’t take immediate action based on the number, you have the wrong metric. Keep in mind the action might be to dig deeper to determine root causes, but the metric should let you know where to start.

So now that we have advice from the person I consider the foremost expert on analytics, let’s answer the question. Which Metric is Best?

The Best Metric is the One That Allows You to
Measure the Success of Your Goals.

I know.. disappointing. You were hoping for something like “Cost per lead!” or “Bounce rate!” but that type of advice will get you in trouble. Here’s why…

Every successful business has to have an objective. The same is true with every program within that business – it’s certainly true for PPC campaigns. If you don’t know why you are spending money, you shouldn’t spend it. :) A single metric cannot possibly tell you the success or failure of all your programs. Each program’s goal should be defined, and your KPIs (Key Performance Indicators – another way of saying success metrics) chosen based on those goals.

Let’s do an example.

Say the overall goal of your PPC Campaign is drive profitable revenue growth. Easy – Revenue should be your success metric, possibly with a daily trend or week-over-week / month-over-month comparison so you can see the growth pattern. But you need to grow revenue while maintaining a specific ROI – your primary metric or revenue then requires a secondary metric to add some bounds. You are only successful in your primary metric if your secondary metric of ROI is within a certain range. So we now have three numbers we are looking at to determine if the campaign is successful. Let’s say we’re looking at a week’s data (keep in mind that this can be at any level – campaign, ad group, keyword, ad, search query, etc)…

  • Example Data in ExcelTotal Revenue for the week
  • % Revenue growth over previous week [(This week - Last week)/Last week]
  • % ROI [(Revenue - Ad Spend)/Ad Spend]

But let’s put these metrics to the test..

  • Uncomplex? Yep. These are all pretty simple numbers.
  • Relevant? I should hope so – these metrics were chosen specifically for the Campaign based on its goals. Different campaigns may have different success metrics.
  • Timely? It should take all of 5 minutes to gather this information every day. Frankly, these numbers are built in to most analytics packages by default.
  • Instantly Useful? Absolutely. You know at a glance whether you are trending in the right direction, whether you need to pull back or spend more. You can tell if something’s wrong by looking at it, and know where to dig.

So there you have it. I was thinking about doing other examples, but have decided I’ve rambled long enough. Let’s take it to the comments.. do you have a goal or campaign (paid search or not) that you want to measure success, but don’t know how? Or do you want to see if your metrics are passing the Avinash test above? Throw them in the comments, and we’ll hash it out!

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