In the digital marketing world, there are dozens of things to potentially track. Knowing which metrics correspond to which actions taken (or not taken) by prospective customers is critical to knowing how to prioritize things. A summary of the primary PPC metrics and what influences them is below. When it comes to running ads on Google’s search engine (or Bing/Yahoo), keywords are what generate impressions. If a keyword matches to a search query, an ad from that account (from the same ad group that contains that particular keyword) is eligible to appear. It may not appear if enough other ads rank higher and take up all of the available ad space on the page, or it may be down at the bottom of the page where it may or may not be visible to someone. You want ads appearing for relevant searches and not for searches that indicate that a person is unlikely to be a prospect, and this is controlled by using the right keywords with strict match types to match to relevant searches, using negative keywords to block unwanted queries from triggering ads, and by bidding appropriately so that the ads can rank high enough to be seen but not cost so much that you end up with a negative return on investment (ROI). Clicks occur when people respond to an ad. A keyword made an ad eligible, but the ad copy itself had to stand out among the rest of the search results such that someone clicked on it to find out what the website had to say. The ratio of clicks to impressions (expressed as a percentage) is called the click-through rate (CTR). People often get caught up in this metric because it’s related to something called Quality Score (a number regarding the “relevance” of your ad/website/keyword combination to any particular query, meant to keep bids alone from determining how ads rank against each other). Keep in mind that people don’t read search results; they skim through them quickly scanning for something that catches their eye. So a high CTR isn’t necessarily a good thing if your ad copy is attracting clicks that rarely convert. A conversion is the completion of a desired action, such as a purchase, or a sign-up, or a phone call, etc. Purchases have dollar amounts associated with them, and other actions can have values assigned to them, making it possible to compare revenue vs. ad spend and calculate an ROI. When generating leads is the goal, the cost per lead (CPL) may be what is used in place of ROI. ROI and CPL are metrics that businesses understand as they typically have a good idea of what kind of profit margin needs to be maintained or what an acceptable cost per acquisition is for prospects. (Customer lifetime value and lead quality are other things to consider as well.) Conversions are generated by websites. The wrong keywords or misleading ad copy can potentially generate low quality website visits, or set the stage for potential success, but either way, the website has the job of closing the deal. Think of your website as your sales team. What would you say to someone in person if trying to generate a sale? Your website needs to do that in place of you being personally available. And if it doesn’t, then it should be updated so that it does. Measuring improvements over time to how well a website generates business is best measured by the conversion rate – the ratio of visitors that turned into customers, expressed as a percentage and calculated as clicks divided by conversions. By taking revenue and cost out of the equation, you aren’t measuring performance in a way that is swayed by whatever the average revenue per sale was over a particular period or by click costs that are partly determined by competitors. Conversion rate directly measures website performance against a particular goal, and the number of people converting relative to the number of people being brought to the site through marketing efforts should be continually improving. Otherwise you’ll be trying to mitigate conversion costs strictly by managing bids, which should still be done as best as possible, but bidding too low means impressions disappear, and then so does the customer.