When it comes to Search Engine Marketing (SEM), it requires more than paying a bid for high-traffic keywords or well-placed ads. Sometimes, your business can be at the top of the search engine, but no sales are coming through. In today’s digital marketing, it’s all about data and metrics to give you a clear picture of how each of your campaigns is performing and where there is room for improvement.
In this article, we will discuss the top 10 ways to track your SEM Key Performance Indicators (KPIs) and why it is important for businesses to monitor their SEM KPIs to maximise ROI and reduce overspending.
1. Click-Through Rate (CTR)
Click-Through Rate (CTR) measures how many people click on your ad after seeing it. It is calculated by dividing the number of clicks by the total number of impressions. The higher the CTR, the more clicks on your ad after people see it.
For example, if your ad receives 30,000 impressions and 1500 clicks, your CTR would be 5%. For SEM, a CTR between 3% – 6% is often considered good, but this number can vary widely between industries and businesses.
A high CTR means your ad is attractive to your targeted audience, and the keywords and copy align with their interest. Low CTR indicates the opposite, your ad is not appealing to users and a readjustment in your audience targeting may be needed.
2. Cost-Per-Click (CPC)
CPC shows the average amount paid for each click on your ad. SEM is Paid-Per-Click (PPC), and this metric is important for budget management and ROI.
The calculation is simple, the total amount spent on a campaign divided by the number of clicks generated. For example, if you spend $1000 and get 1000 clicks, your CPC would be $1.
Tracking CPC helps businesses evaluate whether certain keywords need to be optimised or replaced to improve budget efficiency. Low CPC results from cost-effective targeting, usually when the ad closely matches the user’s search intent without much competition. High CPC shows strong competition for keywords or audience segments.
3. Conversion Rate
Conversion Rate is calculated when a user clicks on a CTA and makes a purchase. This can be anything from downloading free courses, newsletter sign ups or site visits.
For instance, if 400 people clicked on your ad and 40 bought something, your conversion rate would be 10%.
Unlike CTR, which tells you how many clicks on your ad, conversion rate tells you if those clicks translate into purchases. High conversion rates also tell you if the service and products you are advertising are aligned with the user’s expectations when they click on them.
Factors Influencing Conversion Rates Include:
Ad Relevance
Related keywords, compelling ad copy and good CTA help users who already have buying intent to convert them to actual buyers.
Landing Page Quality
A good landing page will decide if users stay after clicking on your ad. It has to be visually appealing, user-friendly, easy to navigate, and have a strong CTA. The purpose of a landing page is to create good first impressions and encourage users to purchase or engage with your business.
User Experience (UX)
Poor load time is a surefire way to discourage conversions. Any encounter with slow load time or a badly optimised interface will likely cause users to click away before they can even log onto the website.
Audience Targeting
An online boutique store offering luxury clothing and high-end fashion is not going to appeal to budget-savvy college students. To increase conversion rates, targeted ads should be based on audience demographics, behavioural data, and purchasing power.
4. Return On Ad Spend
Return on Ad Spend (ROAS) is a metric that shows how much revenue is generated for every dollar spent on advertising. For businesses investing in SEM, ROAS is a good KPI tracker method for evaluating the profitability of each campaign and whether to continue investing in the long run.
ROAS divides the total revenue generated from an ad campaign by the total amount spent. This results in a ratio that shows how much revenue is earned for every dollar invested in the campaign.
Imagine your ad campaign for your ice cream store generates $6,000 in revenue and ads cost $1,000. Your ROAS would be 6:1. For every dollar spent on your business, you gain $6 in revenue.
Campaigns with a high ROAS promise strong revenue potential and can be prioritised for further investment, depending on the goal of your SEM campaign. Conversely, campaigns with a lower ROAS should be scaled down or diverted resources towards more profitable areas.
5. Quality Score
SEM platforms like Google Ads measure and evaluate your ads based on their quality score to determine their relevance to the SERP. The higher your score, the better your ads will perform.
Google rates an ad’s quality score from 1 to 10. Factors such as the relevancy of your ads, landing page quality, keywords and bounce rates all contribute to the score.
Quality Score is not just a number; it’s a deciding factor that would impact your CPC cost and ad placement.
Here’s why it’s important to keep track.
Cost Efficiency
Higher quality scores often lead to lower CPC. Google rewards quality ads, which allows you to stretch your campaign budget. For example, if two advertisers are competing for the same keywords, the advertiser with a higher quality score will pay less.
Improved Ad Position On SERP
No one wants ads that do not interest them. Quality Score is a significant factor in determining how your ad would rank and where it would position on SERP. A higher Quality Score helps increase your ad’s visibility and chances of users clicking on your ad.
Better Return On Investment (ROI)
By improving your Quality Score, you make each click more valuable, as lower CPCs and higher placements help you reach your audience more cost-effectively. This can lead to a better return on investment for your ad spend.
6. Bounce Rate
Bounce rate measures the percentage of users who click on your ad but leave the landing page without taking any action. Bounce rate is a great SEM KPI tool for deciding if your landing page attracts the right audience. If it is high and users leave immediately, reconsider the content, user interface and CTA clarity.
One of the most common reasons for high bounce rates is page load time. If users can’t access your landing page within a few seconds, they are more likely to click off. Mobile optimisation is also important, as an increasing number of people use mobile phones for their scrolling needs, so consider which platform would get the most ad traffic.
In some circumstances, a high bounce rate doesn’t mean your ad is doing poorly. A high bounce rate is expected for blog posts and articles when users finish reading the content and leave the site. For these sites, metrics like scroll depth and time spent on page are better KPI tools.
Impression share measures the percentage of how often your ad appears in SERPs out of the total number of times it could have shown. This KPI metric is used to determine how well your ad is performing from a keyword, budget, and audience targeting standpoint and provides data for areas for improvement.
Your make-up ad targeting college graduates received 7500 impressions out of the total eligible 10,000 impressions. This means your ad has shown up 75% of the time for the keywords you bid on and the remaining 25% are potential leads you missed out on. So, how do you improve your SEM impression share?
Adjust Bids For High-Value Keywords
For search campaigns where the goal is to build brand awareness and get your business’ name out there, consider increasing your bid amount on keywords with low impression share but high performance.
Narrow Your Target Audience
If your ad is relevant to what they are looking for, your budget will go further with a targeted audience. Narrowing your audience increases your impression share because your budget and bids aren’t stretched across a large variety of audiences who are less likely to convert or engage with your ad.
8. Cost Per Conversion
Cost per conversion or cost per action (CPA) measures the amount spent on ads to achieve one successful conversion, typically in the form of sales or a sign-up. CPA should not be confused with conversion rate. CPA shows how much you spend for each conversion, while conversion rate shows how many people who click on your ad completed a CTA.
For example, a SaaS company spends $2,000 on ads to get sign-ups for a free trial of their software, which results in 40 new trial users. In this case, the CPA is $50 per trial sign-up. This KPI metric helps companies determine if this cost is suitable for their goals, such as customer acquisition.
9. Average Position
In SERP, your ad placement is determined by your rank through a numerical system, with 1 being the top rank. Average position is a metric that shows where your ad would be placed over your campaign duration rather than a fixed position.
For example, if your ad has an average position of 1.6, your ad is likely to appear on the first and second ad ranks. Of course bidding for the first position can be very costly and overpaying a bid just to have a minor ranking boost can be financially taxing in the long run. In some cases, businesses may find it more efficient to aim for a slightly lower position in SERP while still achieving good ad visibility without incurring the high cost of being on the top.
10. Engagement Metrics
If something doesn’t interest you, you will likely leave. Engagement metrics track a user’s engagement or interest after they click on your ad. A combination of factors, such as time spent on site, bounce rates and pages per session, helps you to understand your audience’s behavioural pattern and collect user data.
For example, an online car dealer would track engagement metrics to see if users are spending time exploring car listings, used vehicle pages, or reading details about financing options. If a majority of users are spending more time on certain content, then it’s an indicator that the content has captured the user’s interest, which increases the likelihood of conversions.
Why Is It Important To Track SEM KPIs?
SEM is an investment, and like all investments, you expect a profit return. Tracking SEM KPIs allows you to measure the effectiveness of your marketing campaign and provides information to make decisions based on the results of your campaign.
No one wants to spend thousands on an ad only for it to fail to meet expectations, so you keep track of specific metrics and learn what works and what needs further adjustments, ensuring that each penny spent on the ads drives value for your business.
You can better understand your audience’s behaviour and preferences by tracking metrics and data. Your goal is to optimise your budget allocation for maximum ROI, and if your ads aren’t performing as expected based on your goals, it’s time to make changes.
Conclusion On SEM KPIs
By monitoring and tracking your SEM KPIs, you can identify which ads are working and make adjustments where necessary to improve overall ROI. It’s important to review these metrics regularly and ensure that every campaign is aligned with business and campaign goals.
Understandably, all of this can be overwhelming and confusing. It’s challenging to monitor and micromanage every aspect of your campaign just to figure out why CTRs aren’t coming in. We’re here to help. The Best Marketing Agency possesses the skills and expertise in SEM services and has a proven track record of generating client leads and sales.
Leave the complex SEM to us and you can focus on what you do best, running a business. Contact us today for FREE 30-minute strategy session.
Frequently Asked Questions About SEM KPIs
Can A High CTR Lead To A Low Conversion Rate?
Yes, a high CTR can lead to a low Conversion Rate if users are clicking but do not find the content interesting or relevant. If you cannot keep users engaged after hooking them, then a revision of your landing page would be needed.
What Are Good Pages Per Session Rate?
It depends. Generally, 2-3 pages per session indicate solid engagement with content.
How Often Should I Review My SEM KPIs?
Reviewing SEM KPIs weekly or bi-weekly is ideal for making timely adjustments, although high-level analysis can also be done monthly to track longer-term trends.
What’s A Good Benchmark For Conversion Rate In SEM?
Conversion rates vary, but most industries report around 2% – 5%.
How Can SEM KPIs Help Scale My Campaigns?
By analysing SEM KPIs, you can identify which campaigns are most effective and allocate more budget towards high performers to get maximum ROI.
What Is An Acceptable Bounce Rate?
A reasonable bounce rate is 40% or lower. Any higher, and your content needs to be reviewed.
