You changed your bidding strategy and your CPC decreased by how much? But what about CTR? And CPA? What IS did you get? Total conversions? And ROI increased by how much?
In paid search, if a phrase can be given an acronym; it probably will, making it seem like it’s another language. Paid search can get technical very quickly, so here are a couple of decoded acronyms to assist in learning the language of search.
Cost per click (CPC)
Like much of search speak, once written in full form it is fairly obvious what something might mean. Cost per click refers to the total cost…that you pay…per click. It’s often referred to as an average cost per click, as there are a multitude of factors that determine actual cost per click – actual cost per click will more likely than not be different for each individual click. Generally speaking, a low average CPC is ideal as for any given budget; you can achieve a greater number of clicks for that cost when your CPC is lower. For example, if you have a daily budget of $100 you can achieve 20 clicks for an average CPC of $5, but if you can lower your CPC to $4 then you could achieve 25 clicks for the same budget of $100.
CPC is available at the campaign, ad group, ad and keyword level. At the lower levels (i.e. keyword and ad) it’s going to be more informative.
Click through rate (CTR)
Click through rate is the total number of clicks received divided by the total number of impressions received and is a useful measure of how well your ads and keywords are performing. A high CTR indicates that your ads are appearing relevant and compelling to users. Aside from driving more traffic to your site, higher CTRs (relative to your industry) are desirable as an ads expected CTR is a determinate of Quality Score, and the higher your Quality Score, the lower your average CPC.
CTR is available at campaign, ad group, ad and keyword level. The relevancy of ads will impact the CTR you see for your keywords. For example, if your keyword was “buy red pants” and you have two ads in your ad group, an ad with the headline “Buy Red Pants” will have a much higher CTR than one that says “Buy Blue Pants”. So while CTR is a good measure of engagement, be careful that you don’t look at it in isolation from other aspects in your campaigns i.e. the CTR of a particular keyword might be being influenced by the ad you’ve matched to it and vice versa.
Impression share (IS)
Impression share refers to the total number of impressions (an impression is when your ad is displayed) received divided by the number of impressions you were eligible to receive. Impression share metrics are applicable to both the Search and Display network. Why is impression share important? A low search impression share – for examples sake say 10% – means that your ads are only showing on 10% of searches, meaning that on 90% of searches (on your same targeted keywords) your competitors ads are showing and yours aren’t. As the saying goes, make sure you get a slice of the pie.
Cost per acquisition (CPA)
Similarly to CPC, doesn’t need much explanation when written in full. CPA refers to the total cost (of paid search activity) per acquisition (or valuable business action that resulted from paid search). This might be an online sale, enquiry or email sign up. The value derived by the acquisition action will heavily influence the CPA that you try and target.
Return on Investment (ROI)
For each dollar spent, how much revenue was generated? Generally speaking you’d at least want this to be greater than 1 to ensure your campaigns are not running at a loss. With an Ecommerce site this is much easier to see as the valuable action you’re driving is sales dollars, whereas if your valuable action is an enquiry there’s not automatically a dollar value assigned to it so you’ll need to work this out and then work backwards. The ultimate goal is to maximise your ROI and increase the return that you’re generating on each dollar that you’re spending.
These terms only skim the surface but should help in building a dictionary for speaking in search!
Tessa has years of experience in data analysis and number crunching, following the completion of a Bachelor of Commerce with majors in both Finance and Economics. Since discovering the ever changing, complex, and data driven world of digital marketing and SEM she’s never looked back. Tessa currently manages campaigns for clients across a range of industries; specialising in the management of both lead acquisition and e-commerce campaigns. Finding the sweet spots to maximise the return for clients is all in a days work.