Now you have your ads, your keywords, and your account structure, and you want to optimize all of these.

Well, the only way to optimize your campaign is by using the metrics and reporting that Google provides. Let’s take a look at the main metrics you should be paying attention to, and why each is so important.

There are four basic metrics that are important for paid search: impressions, clicks, conversions, and spend.

An impression is a single instance of your ad being displayed when someone types in the
search keyword for it.

So you can consider the number of impressions to be roughly the number of people who look at your ad, or at least the number of viewers to whom the ad is served.

A click is an instance of a viewer actually clicking on your ad once it has been displayed.

This is distinct from the number of impressions because it requires that the viewer actually
clicks on your ad, not just that your ad is displayed.

A conversion is an instance of a viewer that saw your ad, clicked on it, and took the action
you intended for them to take once they got to your landing page.

This action could be downloading an offer, purchasing your product, etc. When you set up your account, you put some tracking code on your website that lets Google know when someone has completed an offer or bought something, so they can keep track of conversions.

Spend is simply the amount of money that you have spent on your campaign so far.

Combining the Four Basic Metrics

These four basic metrics are important to track, but the analytics that will be the most
critical for optimizing your campaign are derived from combinations of these simpler
ones: click through rate, conversion rate, cost per click, and cost per acquisition.

Click Through Rate (commonly abbreviated as CTR) is the percentage of impressions that
turn into clicks. The more this percentage goes up, the more efficient your campaign is.

CTR = Clicks / Impressions

Conversion Rate is the percentage of clicks that turn into conversions. This is also a metric
that denotes increasing efficiency as it goes up.

Conversion Rate = Conversions / Clicks

Cost Per Click (or CPC) is the amount of money you’re spending on each click. You can find
the average CPC by dividing the total spend by the total number of clicks. This is a cost
metric, so improving efficiency means decreasing this number as much as possible.

CPC = Spend / Clicks

Cost Per Acquisition (or CPA) is the amount of money you’re spending on each conversion.
You can find the average CPA by dividing the total spend by the total number of conversions. Again, this is a cost metric, so you want to keep lowering this number.

CPA = Spend / Conversions

Just remember – the higher your percentage metrics and the lower your cost metrics, the
more efficient your campaign will be.

It’s a good practice to set goals for your campaign performance in terms of these metrics.

As you continue optimizing your keywords, ads, and account structure, monitor these metrics closely and use them to measure the performance of your campaign as you work toward reaching your goals.