Pay Per Click Advertising - 3 Ultimate Metrics that drive Performance

Every metric is quite prominent while evaluating PPC campaign performance for e-commerce websites. In order to evaluate the progress, you should be able to figure out the metrics that are important for your business. It is often a problematic task for online retailers to estimate which metrics to focus more importantly.

Few years back, CPC metric was the primary key performance indicator (KPI) for e-commerce websites. Now, it has been changed dramatically, in the highly competitive world of business, it is often difficult to imagine that a CPC metric could be reliably helpful for measuring PPC performance.

Apart from CPC metric, there are three more advanced key performance indicators that measure ROI and drive PPC campaign performance.

1.    Cost per Acquisition(CPA)
2.    Cost per Value(CPV)
3.    Cost per Profit(CPP)

Cost per Acquisition (CPA)

Cost per acquisition, otherwise referred as cost per action. It is bidding metric that measures how much amount you have to pay in order to gain a conversion and it is a part of adwords conversion optimizer feature.

Usually, CPA is much higher than CPC, because user who clicks on your ad will not always complete your desired action (It may be either a purchasing or filling the form). By improving campaign conversion rate, you can lower CPA value substantially. With the high quality score and low CPA, you can bring a huge benefit for PPC campaign.

CPA bidding is the strategy of paid advertising that completely controls your advertising amount instead of paying it to Google and it makes you to pay for each conversion. Moreover, it helps you to avoid spending money on search terms that does not directly drive your business.

Cost per Value (CPV)

CPV tracks real value returned to the business from customers. You can track the value with the help of google analytics and adwords value tracking. However, just tracking the value is not enough to improve PPC performance effectively.

In order to optimize an effective PPC campaign, it is important to consider value of keyword with your bids along with keyword strategies. Using this data, you can maximize the revenue amount. It is simple to install and configure into the e-commerce platforms. In addition, you can spend more on keywords where you're gaining more and save money on keywords that are not building their share of revenue.

Cost per Profit (CPP)

CPP is an ultimate and more advanced metric for improving ROI value. As in, CPV provides advantage for each item rather than complete campaign. However, it doesn't account for profit, which is more essential for e-commerce platform and moreover, high revenue per sales does not equate to high margin profit.

Main difference between CPV and CPP is illustrated with below example:

Interchangeable Lens Camcorder with $1,799.99 bidding get a profit margin of $100, as well as, Sony HD Camcorder with $249.99 bidding which is cheaper than Interchangeable Lens Camcorder brings the same profit margin of $100. If you prefer CPV, you would definitely go with the Interchangeable Lens Camcorder which brings same profit margin as of Sony HD Camcorder. Henceforth, avoid spending on expensive keywords, if you are able to obtain same profit for less or non-profit competitive keywords.

Finch is the most popular and updated option used for CPP for updating transactions by means of google analytics and XML feed. Hence, using CPP as your key performance indicator allows you to drive your PPC campaign into a meaningful and profit margin to increase your ROI.

For better PPC campaign, you need to be laser focused on appropriate KPIs for your e-commerce business rather than on number of clicks.