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While paid search such as Google AdWords can be a great way to attract visitors to your website, it can be difficult to determine the cost-effectiveness of these programs. We can use metrics such as:
Number of impressions (how many times your ad was placed in a search result).
Number of click-throughs (how many times someone clicked on the ad and visited your site).
Click-through ratio (percentage of time your ad was clicked on).
Cost per click (how much you paid for each click).
Total cost (cost for all clicks in the period; note that you can set a total budget)
Such metrics allow you to determine how effective your ad is at getting people to your website, but is that enough? We don’t just want website visitors, we want visitors who engage, take a desired action, become an opportunity for a sale, or even purchase something if the website has a storefront.
We can start by defining desired actions. Do we want visitors to watch a video, read a white paper, register for a demonstration, complete a "contact me" form, or make a purchase? Each of these can be set as a goal that can be tracked by a website analytics tool such as Google Analytics.
The next step is to correlate the information from paid search and website analytics to track more interesting metrics relating to visitors from a paid search click-through such as:
Bounce rate (the visitor came and bounced off—no engagement at all).
Time spent on the site and number of pages viewed (shows level of engagement).
Number of completed goals (the visitor took a desired action).
Goal conversion ratio (the percentage of visitors who took a desired action).
Cost per conversion (how much you spent on paid search for each goal completed).
Evaluating with these criteria enables you to determine which keywords to pay for based on outcomes (engagement and goal completions), rather than simply actions (a click on an ad) or cost. In this way, you can ensure you are using your paid search budget most effectively.
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