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New to Pay-Per-Click? Know this up front!

Updated: Apr 7


New to pay-per-click (PPC) advertising? Know this before you begin!

Pay-per-click advertising is one of the best ways to promote your brand online. It's extremely versatile in the way it allows you to reach customers at any stage of the customer journey. Especially those coveted in-market customers. More importantly, it's one of the most measurable advertising channels around.


Many companies that pay for PPC, don't have a clear picture of what they're getting in return.

I read an article that prompted the one I'm writing now. It said that many companies that pay for PPC, don't know exactly what they're getting in return. As a result, the author suggested many of them might be overpaying.


If you're considering PPC for the first time, let me pull back the curtain and answer a few questions you might be asking yourself.


You can measure it

I said that pay-per-click advertising was one of the most measurable forms of advertising going, and I meant it.


It's more than just impressions and clicks too. In fact, you can measure any number of things that happen online.


But be warned, not every agency or freelancer has the knowledge and experience needed to set up the more advanced tracking.


If you're paying for PPC and the reports you're getting are primarily focused on impressions and clicks, that should be a red flag. PPC campaigns should report on both micro and macro level conversions.

Conversion

To understand how to measure things online, you have to understand what a conversion is. A conversion is any meaningful action that happens online, that you define as being important to your business goals.


A conversion can be triggered on an ad itself, but they're also set up to fire on your website when someone does something that you want them to do.


It's basically a signal that's sent to your analytics, that says "yes", someone did something important.


Conversions are things like:

  • Making a purchase

  • Subscribing to your email list

  • Submitting a lead form

  • Phone calls

  • Clicking a button to get directions

  • Watching a video

  • Staying on your website for a certain amount of time

This is not an exhaustive list either. It can be any number of things.


If someone comes to your website and purchases something from you online, that transaction would be counted as a single conversion. If you have another person visit your website, and they subscribe to your email list, that would be another conversion. So two conversions total.


Below is an example of some of the things a car dealership might track as conversions:

  • Phone calls originating from the ads themselves, or the website

  • Various forms that a customer might fill out (financing form, confirm availability, book a test drive, contact forms etc.)

  • Vehicle Details Pages (VDP)


Example of conversions in Google Ads

Who Configures Conversions?

Ads platforms allow you to track conversions on the ads themselves with relative ease. However, configuring the conversions that happen on a website isn't the easiest thing to do, as it requires programming. Conversions can either be hard-coded into your website or setup in a container using a platform like Google Tag Manager.


Google Tag Manager is a free tool that anyone can use to set up conversion tracking. There are tutorials to help guide you through the setup if you're inclined.



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Micro vs Macro Level Conversions

There's also a difference between the quality (for lack of a better word) of conversions. You can think of macro level conversions as the most important things that you want people to do on your website. The things that will contribute directly to sales or new business. While micro level conversions are the smaller wins that move people in the direction of completing a macro conversion.


Macro Level Conversions Examples

  • Conversions that increase revenues (transactions)

  • Conversions that provide leads (lead form submissions, phone calls)

Micro Level Conversions Examples

  • Conversions that allow for future engagement (newsletter signups)

  • Conversions that signal people are interacting with your content (video plays)

  • Conversions that happen at different stages of the customer journey (adding something to cart, reaching the final stage of the checkout process)

Conversion Values

You can also assign values to your conversions or bring them into your reporting dynamically. When conversion values are included in your reporting, you're able to know if your campaigns are profitable or not. This is so important, especially for companies that have razor thin margins.


I'll expand on that further down, but for now let's talk about where conversion values come from.


Assigning a value to a conversion

To assign values, you'll need to make some assumptions and you'll also need to have a grasp of your ideal cost per acquisition (the price you're willing to pay to get a customer).


Let's say you run a scrap yard and you pay to have PPC ads on Google, targeting anyone searching for "scrapyards near me". The intent behind this type of search is, I have scrap metal, now where can I take it?


Let's say one of the macro level conversions the agency is tracking is the number of times people click the button to get directions to your scrap yard.


As the owner of the company, you believe the majority of people searching for "scrap yard near me" are going to go to the first one they find that's close by.


Since you know that you make at least $10 every time someone comes into the yard to recycle scrap metal, you're comfortable assigning a $5 value to that conversion.


Each time someone clicks to get directions to your scrap yard, it will record another conversion along with the $5 value.


Example:

  • 1 conversion for $5 value, or;

  • 10 conversions for $50 value

Dynamic Values

Another way to bring conversion values into your reports is to have them pull dynamic values from your online eCommerce store.


If you sell products online, instead of having to make assumptions and assign a values to your conversion actions, you can bring the sales information right into your reports.


Example:


If I buy something from your store for $10, that would be one conversion with a conversion value of $10. If someone else comes along and they buy something for $25, that would be another conversion with a $25 conversion value. In your report, you would then see two conversions for a total conversion value of $35.


Why is conversion value important?

Bringing conversion values into your reports allows you to see if your campaigns are profitable. It also unlocks advanced bidding strategies on PPC platforms like Google Ads.

An example of a Google Ads report showing cost and all conversion value.

For example, you're able to see what you spent on your ads, and what you received in terms of revenues.


Return On Ad Spend (ROAS)

A Google Ads chart showing the Conv. value / cost, which in this case is an indication of Return On Ad Spend (ROAS)

Knowing these two values allows you to understand what your return on ad spend (ROAS) is. That is, the revenue you earn for every dollar that you spend on advertising. In this case, ROAS is 5 to 1, or 500%. That is to say, for every dollar this company spent in ads, it earned $5 in return.


Essentially, every advertiser should know exactly what they're paying for ads, and what they're getting in return. Right down to the cent.


Conclusion

I hope I was able to shine some light on some of the finer points of PPC advertising. Pay-per-click is an effective way for most companies to promote themselves. It's also one of the first things businesses should tackle to make sure that their company pops up when someone searches for them, their products or services online.


As with any form of advertising that you decide to pursue, make sure you speak with the agency up front, so that you know exactly what to expect.

  • What are the campaign objectives?

  • What conversion actions will be set up?

  • What other metrics will the agency report on and what do they mean?

  • How often will they report on your campaigns?

Ultimately, what does success look like?