Click-through rates, cost per conversion, quality scores… These are all familiar terms to me, and to the people sitting around me in Add People’s Pay per Click department. But what do they all mean? Sometimes it can be difficult to keep all the Google AdWords terminology straight in your head, so here’s a glossary you can refer to in times of befuddlement:
AD GROUPS
What are they?
Not to state the obvious, but an ad group is a group of ads – all based around a theme.
Why should I use them?
If you group your keywords into common themes, and write different ads for each theme, your customers will see more relevant ads. This will stop someone from Googling the term ‘stereo system’ and seeing a generic ad about ‘electrical equipment’. If they see a focused, relevant ad, people are much more likely to visit your site.
Here’s another thing: don’t group in your stereo keywords with your TV keywords, or your stereo ad might show up when someone searches for TVs. What would be the point in that?
ANALYTICS
What is it?
Google’s in-depth web traffic analysis program.
Why should I have it?
Google Analytics, if installed correctly, lets you see which pages people are visiting on your site, how long they’re staying, and where they’re hitting the back button. Not only that, but there are dozens of reports you can run to compare various statistics against each other. Here at Add People, we consider Analytics to be a vital tool in the managing of a client’s campaign, and once you’ve viewed your site’s statistics, so will you!
BIDS
What are they?
A bid is the maximum amount of money you’re willing to pay for a click. You can set bids at the ad group level, or at the individual keyword level. For example, you might be more willing to pay for high positions on keywords to do with power drills than you are for keywords to do with nails, because your power drills make you more money.
What should I bid?
The amount you’re bidding isn’t the only factor in determining your position on Google, but it’s definitely a major one! If your positions are hovering around the double-figures mark, you’re being outbid by quite a few people, and you’ll need to pay more to appear further up the page.
BOUNCE RATE
What is it?
The bounce rate is a Google Analytics statistic that tells you how many people are clicking your ad, looking at the page it takes them to and then clicking the back button without taking a look at other pages on your site, ‘bouncing’ back to their Google search result page to look elsewhere.
What should I aim for?
A 100% bounce rate is very bad. A 0% bounce rate is practically impossible to achieve (unless you’ve only had one or two clicks to your site), but in theory would be excellent! Overall, we at Add People aim for a lower bounce rate for the AdWords campaign than the website’s average (which includes natural traffic as well as paid clicks). If the site’s average bounce rate is above 50%, it might be worth investing in a new website, or revising your e-commerce order process to make it more accessible.
Generally speaking, aim for less than 50% for your AdWords campaign’s bounce rate. If you can convince over half of your visitors not to click straight back to Google, that’s definitely something positive.
CLICK-THROUGH RATE (CTR)
What is it?
Your click-through rate tells you what percentage of ad views (also known as ‘impressions’) leads to clicks. You might have 100 impressions resulting from a certain keyword being searched for on Google, and two people actually clicking through to your site. This would give you a 2% click-through rate.
What should I aim for?
If a keyword has a high number of impressions and a very low number of clicks, it’s probably not working for you. If this is a problem that affects most of your keywords, you might want to look at rewriting your ads, or making your keywords less generic.
Personally, if a keyword has generated over 100 ad impressions and less than a 1% click-through rate, I pause it and give other keywords chance to spend. Unless it’s showing solid evidence of conversions in the conversion tracker, that is. Compared to conversion stats, the click-through rate isn’t that important – keywords with a low click-through rate and thousands of impressions can be very successful converters!
CONVERSIONS
What are they?
‘Conversion’ is a fancy way of saying that you’ve either made a sale or generated a lead that might become a sale. If you have an e-commerce site that customers can buy directly from, then a conversion is a sale. If you provide a complex service that you need to directly give to the customer – for example, a building renovator – then your conversion is that a customer has provided you with details to call them back regarding the job. It’s not a sale, but it’s a potential sale.
What should I aim for?
As many conversions as your business can handle! Conversions are the way you’ll make your money, and everything you do should be a step toward making a conversion and getting some cash coming in. Watch your campaigns closely to ensure you’re not spending more on your keywords than you’re getting back in conversions.
CONVERSION TRACKER
What is it?
Possibly the best tool Google AdWords has to offer! If installed correctly, the conversion tracker can keep count of which keywords lead to sales, how much you’re spending on AdWords per conversion, and the percentage of clicks that lead to conversions. For this to be accurate, you need to install it on the ‘thank you’ page of your website that follows a successful purchase, or submission of a contact form.
Why should I have it?
It’s a quick and easy way to see whether or not you’re making a profit, breaking even or making a loss. After all, what’s the point in throwing money at a campaign and only getting half the amount back in profits? Not all websites support conversion tracking, but we strongly recommend owning a website that does.
CONVERSION RATE
What is it?
The conversion rate is a percentage, which tells you how many of clicks through to your site are becoming conversions, or sales/leads.
What should I aim for?
This varies from customer to customer, but without exception, you want this percentage to be as high as possible, to minimise the amount of profit lost by clicks that don’t convert. The more expensive the goods you’re selling, the less vital a high conversion rate is – if you’re selling something at £100, you can afford more clicks before making a loss than if you’re selling something at £5.
COST PER CLICK (CPC)
What is it?
The average cost you pay per click of your ads, for a certain keyword, ad group or across a whole campaign. The lower the cost per click, the higher your profits if you convert – but that has a flip-side. If you have a very low cost per click, chances are you’ll also have a low position on Google’s ad bar. That means your competitors have the advantage, and you might get overlooked.
What should I aim for?
Without knowing the nature of your business, it’s impossible for me to guess! Google’s traffic estimator tool is your best bet here. Use phrase and exact matched keywords, and well-chosen negatives, to reduce the likelihood of you getting matched to irrelevant search terms and to keep costs low.
COST PER CONVERSION
What is it?
It’s the amount of money you’ve paid, on average, per every converting click you get. For example, say you’ve spent £50 so far over the course of your AdWords campaign. You’ve had 5 conversions, all at various times. Therefore, your cost per conversion averages out at £10.
What should I aim for?
A lower cost per conversion than the product you sell. If you’re spending £10 per conversion on advertising, your product should sell at more than £10 – significantly more, if you’re hoping to make a profit through AdWords! If it’s only a £5 product, then it’s costing you twice as much to advertise than you’re making back in sales – and that’s going to put you in the red pretty quickly. Keep your costs lower than your profits, and you’ll be fine.
Part II of this glossary can be found here!
Tags: adwords, google adwords, pay per click, ppc
FREE Website Appraisal
About Us
Add House,