October 21, 2020
Understanding Google’s “Customer Value” Feature
Too often, we evaluate ad copy based on CTR. Although CTR is an important metric, and one that is directly impacted by changes to ad copy, it should not usually be the primary metric you use to select winning ad copy. Instead, take a few minutes to consider the following metric, which you should always evaluate when analyzing ad copy performance. That metric is ‘Conversions per 1000 Impressions.’
Keep in mind that not all traffic is good traffic. If it was, you wouldn’t need to work tirelessly on keyword selection, ever-growing lists of negatives keywords, and constant settings adjustments based on the times, regions, and device combinations that provide the best return for your ad spend. Why, then, would you sacrifice all that hard work to evaluate ad copy based on its ability to improve CTR, instead of a conversion-based metric? CTR does not tell you how well users convert once they arrive on your site, nor does CTR tell you how well your ad copy is qualifying the clicks that comes to your site.
As an example, let’s imagine I am advertising for a staff scheduling platform. My goal is to bring in leads from businesses that need a platform to schedule their employees and manage shifts easily. The ad group I am writing ad copy for has +scheduling +software as its only keyword. Look at the two ad copy variants below:
Ad Copy 1: “Easiest Scheduling Software on the Market. Unbelievably Easy, Use From Anywhere.”
Ad Copy 2: “First Class Shift Scheduling Software. Ideal for 5+ Employees, Starts at $15/mo.”
Which one of these do you expect would receive the highest CTR? Almost certainly, the answer is Ad Copy 1. However, many of those clicks will come from students looking to create calendars for themselves, or from my mom as she tries to figure out how to schedule lunch dates with her friends on her phone. There is nothing in Ad Copy 1 that qualifies that this is a paid solution for business users. That is the flaw in only looking at CTR – you might get more clicks only to end up with a worse return on investment.
Instead, you should look at how many conversions this piece of ad copy generates each time the ad is shown. To simplify, I recommend dividing impressions by 1,000 to create a more manageable number. The metric looks like this:
Conversions per 1000 Impressions = Total Conversions/(Total Impressions/1000)
This simple equation takes into account both CTR (that is, how likely is the ad to receive a click), and also conversion rate (how likely the ad is to receive a conversion once it’s been clicked) to give you a much clearer idea of what return our ad copy is generating.
You can also tailor this metric for a revenue-focused advertiser. Simply create a Revenue per 1000 Impressions metric and substitute revenue for conversions in the formula above.
You can add this metric directly to your AdWords account by clicking on ‘columns’ > ‘modify columns’ > ‘custom columns,’ and add this as a custom column to display this metric for future ad copy evaluations.
If you are still thinking of ad copy in terms of generating clicks and improving CTR, it’s time to focus on the real goal. Using this formula to analyze ad copy can drive efficiency improvements in your search accounts with very little extra work on your part.