The 10 numbers a PPC advertiser should know.

PPC - Pay per click advertising - Advertising through search engines. e.g google adwords, msn adcenter, yahoo search marketing. Buying advertsing space on these search engines is through an auction system. And you don't pay for people seeing your ads. You only pay if they click on the ad. Hence the term pay per click.

1. Ad spend budget - How much can the advertiser spend? Per week, per month, for this quarter, annually? How much will it grow to?

2. Goals - How many visitors, conversions (leads/sales) does the advertiser want? Define per day/perweek/permonth/per quarter/per year goals.

3. Impressions - How many people saw the ad?

4. Clicks and CPC - Everytime someone clicks on the ad, it constitutes a click. In simple terms, 1 click=1 visitor. CPC is the cost per click. How much do we pay to gain a visitor?

5. CTR % - of the total people who viewed our ad, percentage of people who clicked on it.
CTR = (Clicks /impressions)*100. A high CTR (2% +) indicates
a. A good Keyword fit with advertisers products or services
b. Effective ad copy.
CTR should be measured at kw, ad, ad group(order,category), campaign and account level.

6. Total cost - What is the actual ad spend per day/per week/per month.
a. Do your impressions/clicks/conversions increase with increased budget?
b. Does your CPC and cost per conversion decrease with increased ad spend cost?
c. what is the optimal spend?

7. Conversions and cost/conversion -
a. define a conversion - is it a person filling out a form, starting a download, completing a sale, ordering a newsletter?
b. How are you tracking conversions?
c. How many conversions do you get per day/per week/per month? at what cost per conversion?
d. Are you achieving the goals set in 1.

8. Sales and Revenues
a. Number of sales achieved through PPC
b. Revenue per sale.
c. Total revenues, revenues through PPC
d. Total Profits, profits through PPC
e. How does PPC advertising compare with other marketing programs

To understand more on how to calculate sales, revenues, margins and profits refer to Rajiv's excellent post on this topic (complete with formulae!)

9. KPI's - Key Performance Indicators - KPI's are percentages and comparitive charts to help you better your achievements. They help answer the question - How do you evaluate the performance of your campaign?
Start with evaluating your bottom line. How much of your profits come from sales generated through PPC?

Then move backwards:

How many visitors, conversions did we get this week/month/year compared to last year? At what cost?


10. Of the 9 numerical values above

a. which numbers have to improve
b. which numbers have reached their best performance