When you log into Google AdWords, it’s easy to get overwhelmed.  On almost every page you’ll find a new table full of data, along with a graph that charts your different metrics over a given date range.

For more experienced advertisers, the robust reporting capabilities are great for digging into campaigns to make improvements.  However, if you’re just getting started with Google AdWords, then it’s almost impossible to know where to look.  In other words, how do you know which metrics are really important to review?

To answer that question, we need to take a step back and look at why we’re reviewing all these metrics in the first place.  Ultimately, the goal is to use the data to improve the performance of your advertising campaigns.  And to improve overall performance we need to answer the following 4 critical questions:

  1. Do you have compelling ad copy?
  2. Is your landing page converting visitors into leads and sales?
  3. Is your campaign generating a return on investment (ROI)?
  4. Is there an opportunity to get even more traffic from your target keywords?

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Do you have compelling ad copy?

When prospects search in Google, then they scan the results quickly and decide which one to click on.  That means if you don’t have compelling ad copy, then your prospects are going to click on your competitors’ ads instead of your ads.

How do you know if you have compelling ad copy?

The answer is revealed in your click-through rate, or CTR.   CTR is calculated by dividing the number of times your ad is clicked by the number of times your ad is displayed in the search results (aka ad impressions).  A high CTR therefore indicates your ads are resonating with your target audience, while a low CTR means your ads are being ignored.

So what’s a high CTR?  Well, that depends on the CTR of all the other ads in the search results.  CTR is relative to your competition.  If your competitors have a 2% CTR and your ads have a 5% CTR, then you have more compelling ads.  If your competitors have a 5% CTR and you have a 2% CTR, then your ads need to be improved.

Simple enough right?  Well, actually Google AdWords doesn’t tell you your competitors’ CTR.  Instead, they reveal your Quality score.  Every keyword in your account is assigned a Quality Score and one of the biggest factors is your CTR.

To see your Quality Score, go to the Keywords tab in your account and hover over the speech bubble icon next to each keyword.  Then you’ll see if your “expected clickthrough rate” is above average, average, or below average.  From there you’ll know how you stack up versus your competition.


Is your landing page converting visitors into leads and sales?

Depending on how your AdWords account was set up, this question will be either easy or impossible to answer.  It’ll be easy if you have conversion tracking set up; it’ll be impossible if you don’t.

AdWords provides conversion tracking code that allows you to track webform submissions, online orders, phone calls, and even offline sales.  When all of this is set up properly, then you’ll be able to view “Conversions” in your AdWords reports to see if your landing pages are converting visitors into leads and sales.  If your landing pages are not converting, then you know where you need to focus to improve your campaigns.



Is your campaign generating a return on investment (ROI)?

Again, this question can be answered only if conversion tracking was set up properly.  For e-commerce businesses, order values can be sent automatically to AdWords so that you can see the exact revenue generated from your advertising campaign.  Simply compare your “Conversion Value” data in AdWords versus your “Ad Spend” data to calculate your ROI.

If you’re not running an e-commerce business then that will make this a bit more difficult, but not impossible.  You’ll need to use a combination of phone call tracking, lead tracking in a customer relationship management (CRM) system, and the “offline import” feature in AdWords.  (I don’t have time in this article to explain how to set all of that up, but once you set those tracking mechanisms up, then you’ll be able to calculate your ROI.)



Is there an opportunity to get even more traffic from your target keywords?

At this point, I’m going to assume your campaign is profitable, and you’re now looking for opportunities to expand.  The first place to look when you want to expand is with your existing keywords.

In other words, are your ads maximizing all of the available ad impressions and getting in front of all of your prospects searching in Google?

The answer is revealed in two key metrics: Impression share and Avg. position.

Impression share is the number of ad impressions your ads are currently getting versus the total available ad impressions for your keywords.  For example, if there are 1,000 searches for one of your keywords and your ads are displayed for 900 of those searches, then your impression share would be 90%.  If your impression share is lower than 95 – 99%, then there is opportunity to get even more impressions.  Note that you’ll likely never get 100% impression share because Google is always rotating different advertisers.

Avg. position tells you where your ad is displayed in Google’s results.  For example, if your avg. position is 5, then your ad is typically displayed in the 5th ad slot.  That means if you raised your bid to get into the top 3 slots you’ll likely get more clicks and exposure.  If your avg. position is 1, then your ad is already in the top ad slot and there is no opportunity to get more clicks and exposure.


What Have We Learned?

There’s a lot of data in Google AdWords and it’s easy to get lost once you log in and start clicking around.  By focusing on just a few key questions highlighted above, you can determine where you need to focus your efforts to make the biggest impact on ad performance.

Start by reviewing the metrics in this article and then as you get more familiar with the AdWords interface you’ll be able to dig deeper and deeper to reveal even more opportunities to improve.


What’s Next?

For even more tips on how to improve your Google AdWords campaign, click here to get our Ultimate Google AdWords Checklist.