Complete Guide to Analytics behind Google Adwords

 

If you do multi-channel marketing for your company than you simply can’t afford to ignore Google Adwords.

In order to get optimum results from your Adwords campaigns you need good practical knowledge of how Adwords really works, how different Adwords metrics are calculated and how different campaigns, ad groups, keywords and landing pages are analysed  and optimised for traffic and conversions.

You need to understand the key concepts behind Adwords system as outlined below.

Index

  1. CPC, CPM and CPA Bidding options
  2. Max. CPC, Actual CPC & Avg. CPC
  3. Ad position
  4. Quality Score
  5. Google Ad Rank Algorithm
  6. Secret to getting highest possible return on your Adwords Investment

If you are an experienced Adwords user, you can skip the upcoming sections and jump straight to the section titled: ‘Secret to getting highest possible return on your Adwords Investment’.

But there is no harm in reading few more lines. Who knows, you may learn something new.

 

CPC, CPM and CPA Bidding options

Whenever a user performs a search on Google (or its search partners), Google run an auction for clicks known as the Adwords Auction.

To participate in any auction you need to bid. Similarly to participate in Adwords Auction you need to bid on keywords.

Your bid is known as the CPC (Cost Per Click), CPM (Cost Per Thousand Impressions) or CPA (Cost per acquisition)

In case of CPC bidding you pay for each click on your ad. CPC bidding is suitable if you are mostly interested in getting traffic to your website.

In case of CPM bidding you pay every thousand times your ad is displayed. CPM bidding is suitable if your main focus is on branding, getting site visibility

In case of CPA bidding you still pay for each click on your ad but you don’t need to manage your bids manually to get conversions. The bids are automatically managed by Google Adwords Conversion Optimizer. This type of bidding is suitable if you are mainly interested in getting conversions.

Note: In order to use CPA bidding, you must have conversion tracking enabled and your campaign must have received at least 15 conversions in the last 30 days.

 

Max. CPC, Actual CPC & Avg. CPC

The maximum amount you are willing to pay for each click on an ad is known Max CPC.

The actual amount you pay for each click on an ad is known as Actual CPC.

The actual CPC is usually less than the Max. CPC because you need to pay only that much to Google which is good enough to rank your Adwords ad higher than the advertiser immediately below you.

Actual CPC = Ad Rank of the competitor below / Quality Score of the advertiser

To get a sense of your actual CPC look at the Avg. CPC column in your Adwords reports.

Avg. CPC is the average amount you pay for each click on your ad.

 

Ad position

It is the position of your ad on Google Search Result Page. Your ad can appear on the top of the search result page, on the side of the page or at the bottom of the page.

Ad position of 1 means, your ad is the first ad on a search result page. Similarly, ad position of 8 means, your ad is the 8th ad on a search result page

Higher is your ad position, higher is the probability that searchers will see your ad and click on it. So you should aim for high ad position.

The ad position is calculated by Google Adwords system via ‘ad rank’.

 

Quality Score

Quality Score is a factor used by Google Adwords system to determine how relevant your keyword (on which you are bidding) is to the user’s search query, your ad copy and the corresponding landing page.

Most of the time when we talk about the quality score, we are talking about the quality score of a keyword. However we can also have quality score of a display ad or mobile ad.

So there are three types of quality scores in total:

  1. Quality Score of a keyword – it is used when the ads appear on Google Search Network.
  2. Quality Score of display ad – it used when the ads appear on Google Display Network
  3. Quality Score of mobile ad – it is used when the ads appear on Mobile devices.

Note: Quality score of a keyword is re-calculated each time it triggers an ad. If the quality score of your keyword is very poor, your ad may not be eligible for ad auction.

Quality score is measured as a number from 1 to 10, where 1 is the lowest quality score and 10 is the highest.

Higher your keyword’s quality score, higher will be your ad position and ad rank and lower will be your first page bid estimates, top Page bid estimates and your actual CPC (i.e. less amount you will have to pay for each click on your ad).

First page bid estimates – it is the approximate CPC bid needed for your ad to appear on the first page of Google Search result. This bid estimate is based on quality score and current advertising competition.

Top page bid estimates – it is the approximate CPC bid needed for your ad to regularly appear in the top positions above the Google search results. This bid estimate is also based on quality score and current advertising competition.

fig-2-quality-score

The historical performance is the biggest component of Quality score.

Historical performance is made up of:

1. Historical CTR of your keywords
2. Historical CTR of your display URLs
3. Overall Historical CTR of all the keywords and ads in your Adwords account (account history)
4. Historical performance of your Adwords account in targeted geo-locations.
5. Historical performance of your Adwords account on targeted devices (desktop, tablets, mobiles etc).

The second biggest component of quality score is ‘Relevancy’.

Relevancy means how relevant your keywords (on which you are bidding) are to the users’ search query, your ad copy and the corresponding landing page. It also means how relevant your ad copy is to its corresponding landing page.

The third biggest component of quality score is ‘Landing Page Quality’.

The landing page quality is determined by:

  1. How relevant your landing page is to its corresponding ad copy and the keywords you are bidding on
  2. Landing page load time
  3. And other factors like originality of the contents, navigability etc.

 

Google Ad Rank Algorithm

Google ranks Adwords ads on the basis of Ad Rank. It is calculated as:

Ad Rank = Max. CPC Bid * Quality Score

The ad rank determines your ad position. The ad rank determines whether or not your ad is eligible to appear with ad extensions, site links etc.

fig-1

Here advertiser-1’s ad won’t rank as his keyword’s quality score is very poor (1).

Advertiser-3 has got highest ad rank (12), so his ad will get the 1 position on search results page for the targeted keyword. Advertiser-2 has got second highest ad rank (9), so his ad will get the 2nd position on search results page for the targeted keyword and so on.

In order to rank higher than advertiser-3, you need to achieve an ad rank higher than 12.

You can get a higher ad rank by increasing your Max. CPC bid and/or by improving your quality score. In case your Quality Score is already 10, then the only thing that you can do to improve your ad rank is to increase your Max. CPC bid.

Off course I have made this all very simple for you. The ad rank algorithm is much more complicated.

 

Secret to getting highest possible return on your Adwords Investment

If you are a beginner in Adwords and your aim is to get highest possible returns on your Adwords investment then you should consider running your Adwords campaigns on CPA bidding as soon as there are eligible for it.

If you are an advanced Adwords/Analytics user, you should read the ‘Super Geeks Section’ below:

super-geek-starts

If you are an advanced Adwords/Analytics user, you should avoid bidding on CPA. This is because Google Adwords use the last click attribution model. So in case of Adwords, the last click which completed the sales gets all the credit for conversion.

Average PPC marketers bid only on last click keywords. These are the keywords which completed the sales. They don’t bid on first click and middle click keywords. First click keywords are the keywords which initiated the sales and middle click keywords are the keywords which assisted the sales:

fig-3

Different keywords (first click keywords, middle click keywords and last click keywords) work together to create a sale. So in order to get optimum results from your PPC campaigns, you need to bid on all the keywords {first click, middle click and last click keywords}. If you understand Attribution modeling you will get my point. If you wish to learn more about attribution modeling then you should read the following posts:

Attribution Modeling in Google Analytics – Ultimate Guide

Google Adwords Attribution – Introducing Effective Click Optimization

Because of Google Adwords Last click attribution model, the CPA that you see in your Google Adwords report is not your actual cost per acquisition. It is the cost per last click conversion.

So if you ignore first and middle click keywords and optimize PPC campaigns on the basis of cost per last click conversions than you won’t get optimal results and sometimes even lose money. This is because if a keyword is not completing a sale, it may be initiating a sale or assisting a sale (Always Remember That) and if you stop bidding on it because its cost per last click conversion (the so called CPA reported by Google Adwords) is too high or it is not completing any conversion then you may even lose money.

super-geek-ends

 

The very first step toward getting the highest possible return on your investment is determining your Maximum Profitable CPA (Cost Per Acquisition). It is the maximum amount you can pay for each conversion and still make profit on sale.

Let us suppose that you manufacture and sell camcorders. You sell camcorders for $300 per item. Let us suppose that the total cost of manufacturing, packaging and shipping a camcorder (including sales tax and other taxes) is $200. So the amount of money you make (i.e. profit) on each camcorder is: $300-$200 = $100

Let us assume that this profit doesn’t include the cost of marketing the products via Adwords campaigns. So,

Profit per Conversion (before Adwords Cost) = $100

In order to remain profitable your cost per acquisition (or cost per conversion) via Google Adwords campaign should be below $100 otherwise you won’t make any money (profit). The CPA that you will choose to target depends upon your profit margin.

Profit Margin = (Net Profit/Revenue) * 100

If you operate on high profit margin then your cost per acquisition needs to be low. But bear in mind that maintaining high profit margins can result in decline in overall sales volume. This is because the aim here is to get the most profitable sales and not highest possible volume of sales.

If you operate on low profit margin then you can afford high cost per acquisition. This is because the aim here is to get highest possible volume of sales and not the most profitable sales. FMCG companies like ‘Tesco’ operate on low profit margin. Since they make less profit per item, they need to sell large volume of items in order to remain profitable. Steep decline in sales volume will quickly erase their profit and result in net loss.

Side note: I am not a pricing strategy consultant but according to my experience, businesses which don’t operate on high profit margins generally generate more profit than those who choose to operate on high profit margin. So whenever there is a tradeoff between profit and profit margin, I would go for profit any time of the day.

 

Once you know your profit margin, you can decide your ‘Target CPA’ i.e. the maximum amount you are willing to pay for each conversion and still maintain your profit margin. Let us suppose that your target CPA is $20. Then $20 is the maximum amount you are willing to pay for each conversion and still maintain your profit margin.

If you are a beginner in Adwords you would be using conversion optimizer. While enabling this tool you can either start with the recommended bid or specify your target CPA. If you are an advanced user you would not be running conversion optimizer and you would adjust the bids and do all the calculations manually (not exactly manually but via spreadsheet).  This is because you also need to optimize for first click and middle click keywords as explained above and keep multi channels attributions into account.

 

In any case, once you have decided your target CPA, you run the ads for as long as is your sales cycle (default 30 days) and then note down the Actual CPA. It is possible that your actual CPA exceeds your target CPA. This happens because Actual CPA depends upon the factors which are outside Google’s control like: Conversion Rate and Max. CPC bid. The conversion rate depends upon your ad copy, landing page and your brand credibility. Max. CPC bid depends on the advertising competition. Both of the factors are not exactly in Google’s control.

Actual CPA = Max. CPC / Conversion Rate

 fig-4

If your actual CPA is higher than your Target CPA, then you need to tweak your Adwords campaigns in such a way that your Actual CPA is as close as possible to your target CPA (as shown in Fig.4 above). The best way to reduce your Actual CPA is to increase the conversion rate. Higher the conversion rate, lower will be the actual CPA. You also need to keep an eye on net profit and profit per conversion (including Adwords cost)

Sometimes you may need to increase your target CPA (compromise on profit margins) if you profit per conversion start declining while you are attempting to bring the Actual CPA as close as possible to your target CPA. Sometimes your Actual CPA gets even lower than your target CPA while you are still making incremental profit (as shown in Fig.4 above). In such case you set up new Target CPA which is lower than the actual CPA and then again tweak the campaigns to determine the most profitable CPA.  So you may need to experiment with different Target CPAs before you can find your maximum profitable CPA.

 

Explanation of various metrics used in the table above:

  1. All the metrics are for a particular ad group in an Adwords campaign.
  2. Total clicks, Number of conversions, conversion rate, Max. CPC and Avg. CPC metrics are determined through Google Adwords reports.
  3. Profit Per conversions (before Adwords cost), Target CPA, Actual CPA, Net profit and Profit Per conversion (including Adwords Cost) metrics have been calculated manually.
  4. Max. CPC is the maximum amount you are willing to pay for each click.
  5. Avg. CPC is the average amount you pay for each click. Generally avg. CPC is less than the Max. CPC
  6. The Actual CPA = Max. CPC/ Conversion Rate
  7. Net Profit = [{Number of conversions * Profit Per conversions(before Adwords cost)} – {Total Clicks * Avg. CPC}]
  8. Profit per Conversion (including Adwords Cost) = Net Profit / Number of Conversions.

 

Google Adwords Analysis process consists of following four phases:

  1. Business analysis
  2. Configuration
  3. Analysis
  4. Recommendation

Here the output of each phase provides valuable insight for the next phase.

So if you skip a phase then you won’t get optimum results, from either your analysis or marketing efforts.

 

Phase-1: Business Analysis

Business analysis is the most important phase of Google Adwords Analytics.

The quality of the results that you will get later depends a lot on your business analysis. Often marketers/analyst jump straight into analytics reports without doing the required preparation.

Business analysis means investing time and resources in understanding the client’s business, his industry, his products, USP, short term & long term goals, competition and the target market.

If you don’t understand the business, its products, goals and market then you may never know what to look at and where to look at in any analytics report.

You may never know where to direct your marketing efforts and budget.

In short you will have hard time moving forward in the right direction and producing optimum results through Adwords campaigns analysis.

 In this phase we do following types of analysis by interviewing the client and by browsing his website:

1. Profile Analysis – get a basic understanding of the business, its history, brand story, revenue model, USP, employee base, client base etc.

2. Products/Services Analysis – get a basic understanding of what the products/services are all about. Products cost, products range, most profitable products, least profitable products, products’ USP etc. How the products are promoted and sold.

3. Market Analysis – get a basic understanding of the target audience. Who are they, where they live, why they buy the products, best customers in terms of revenue generation etc.

4. Goals Analysis – get a great understanding of client’s short terms and long term goals like leads, sales, brand awareness, increase in market share, customer retention etc. Without well-defined goals there is no optimization.

5. SWOT Analysis – determine the strengths, weaknesses, opportunities and threats for your client’s business. Determine how strengths can be maximized, weaknesses can be minimized. Determine how opportunities can be leveraged and how threats can be overcome.

6. Competitors Analysis – determine the top 3 competitors of your client and do profile, product, market, goals and SWOT analysis for each of them.

 

Phase-2: Configuration

In this phase we configure the Google Analytics and Google Adwords accounts to get all the right date for deep analysis later on. We need data and correct data before we start interpreting analytics reports. Any conclusions based on erroneous data can never produce optimum results and can even result in monetary loss.

Therefore it is critical that we configure the Google Analytics and Google Adwords accounts correctly. The configuration process includes:

  1. Getting administrative rights
  2. Enabling conversion tracking in Google Adwords account
  3. Connecting Google Adwords to Google Analytics account.
  4. Enabling Auto Tagging in Google Adwords account
  5. Enabling E-Commerce Tracking in Google Analytics account
  6. Enabling ‘Adwords Cost Source’ settings in Google Analytics account
  7. Enabling ‘Data Sharing’ settings in Google Analytics.
  8. Importing Google Analytics metrics to Adwords reports.
  9. Importing Google Analytics goals and transactions to Adwords conversion tracking.
  10. Creating a separate profile for tracking Adwords campaigns in Google Analytics

 

Getting administrative rights

You need to get administrative rights on both Google Analytics and Google Adwords account in order to work faster. Once you become account administrator it will be easy for you to make changes to the account whenever you want. Otherwise you have to depend on a “third party” every time you choose to make some changes.


Enabling conversion tracking in Google Adwords account

As a marketer you need to know what happens after a user clicks on your ad. Did he purchase your product? If yes, then which keyword, ad, ad group or campaign triggered the conversion?  By knowing this, you will know which ads, placements and keywords lead to conversions and are worth bidding on.

The ‘conversion tracking’ feature in Google Adwords can help you in getting this insight. In order to calculate the ROI of your Adwords campaigns you have to enable conversion tracking in your Adwords account.  Check out the following video to learn more about the benefits of conversion tracking and how to enable it in your Adwords account:

 

 

 

Connecting Google Adwords to Google Analytics account

Linking Adwords account to your analytics account help you greatly in understanding what people do after they click on your ad and land on your website. You can understand the behavior of Adwords visitors in terms of site usage (pageviews, bounce rate, avg. visit duration etc), goal conversions and e-commerce transactions.

This type of insight helps immensely in optimizing ad copies, keywords and landing pages of an Adwords campaign. Check out the following video to learn connecting Google Adwords to Google Analytics account:

 

Enabling ‘Auto Tagging’ in Google Adwords account

Tags are campaign variables which are added to the end of destination URL of an ad. Through campaign variables you can send information (like source, medium, campaign name, campaign term etc) about your marketing campaign (like PPC, email marketing, affiliate marketing, display etc) to the Google Analytics server.

Tagging a URL means adding campaign variable(s) to it. You can tag Google Adwords campaigns either manually or through ‘auto tagging’. However you can tag non-Google Adwords campaigns (like Bing PPC campaigns, Email marketing campaigns, Affiliate campaigns etc) only manually.

When you choose to tag a URL manually, you manually add following campaign variables to the end of the destination URL of your ads:

  1. utm_source – used to specify traffic source. For example: google, yahoo, facebook, bing etc.
  2. utm_medium – used to specify traffic medium. For example: cpc, ppc, banner, email, affiliate etc.
  3. utm_campaign- used to specify the name of the campaign. Campaign name can be a product name, promo code etc.
  4. utm_term – used to specify the paid search keyword. For example: event-planning-courses, event-management etc.
  5. utm_content- used to specify the ad version. For example: banner-link, text-link etc.

Note: the use of the campaign variables ‘utm_term’ and ‘utm_content’ is optional.

When you choose to ‘auto tag’ a URL then Google automatically ads ‘GCLID’ to the end of the destination URL of an ad. GCLID stands for ‘Google Click ID’. It is a unique ID used by Google Analytics to track and display Adwords clicks in your reports. You can see the GCLID in the landing page URLs of your Adwords ads (provided the auto tagging is enabled).

Example of non-tagged URL:  http://www.abc.com

Example of auto-tagged URL: http://www.abc.com?gclid=CLjTpNrg8NIC

Example of manually tagged URL: http://www.abc.com/?utm_source=bing&utm_medium=ppc&utm_term=car-insurance&utm_content=text-ad&utm_campaign=car-insurance-promo-feb

 

Note: You should always Google URL builder to manually tag URLs.


Best Practices for Tagging URLs

  1. Avoid manually tagging your Adwords URLs. Use auto-tagging instead.
  2. Always use Google ULR builder and spreadsheet to tag multiple URLs.
  3. Use consistent names and spellings for all of your campaign variables’ values.
  4. Use only the campaign variables you need.

Note: When you use ‘auto tagging’, Google automatically tags the campaign source and medium of your AdWords ads as google / cpc. 

 

Advantage of Auto tagging over manual tagging in case of Google Adwords Campaigns

Google strongly recommends using ‘auto tagging’ for Google Adwords campaigns and there is a strong reason for that. When you manually tag your adwords URLs, the Adwords reports in Google Analytics show results only by ‘campaign’ and ‘Keywords’. But when you enable ‘auto tagging’, Adwords reports (in Google Analytics) show detailed information about your Adwords campaigns.

You can then see results by:

  1. Campaign
  2. Keywords
  3. Ad Groups
  4. Ad Content
  5. Match Type
  6. Display URL
  7. Destination URL
  8. Keywords positions
  9. Day parts etc

The other benefit of auto tagging is that it saves time. You don’t need to manually tag each and every destination URL of your Adwords ads. This is a life saver esp. if your Adwords account is very big.

url-autotagging

To enable auto-tagging follow the steps below:

  1. Sign in to your Google Adwords account.
  2. Click My account tab > Preferences.
  3. In the ‘Tracking’ section, click on the ‘Edit’ link
  4. Check the ‘Destination URL Auto-tagging’ checkbox.
  5. Click on ‘Save changes’ button.

Note: You should not use auto tagging and manual tagging at the same time. This can result in data discrepancies in your reports.

 

Factors which can prevent auto-tagging from working properly and how to test for issues

There are several factors like third party redirects, encoded URLs and server settings which can prevent auto-tagging from working properly. These factors can cause GCLID parameter to be dropped from the landing page or generate error pages. Dropped GCLID parameter can cause Google Analytics to treat Google Adwords traffic as organic, direct or referral traffic instead of paid search traffic.

So you need to make sure that third part redirects or server settings are not preventing your auto tagging from working properly. You can do this by following the steps below:

Step-1: Add ‘?gclid=test’ to the end of the destination URL of your Adwords Ad. For e.g. http://www.abc.com/?gclid=test. If glcid=test is not the first parameter, then add ‘&gclid=test’ to the end of the destination URL of your Adwords Ad. For e.g. http://www.abc.com/?source=google&gclid=test

Step-2: Copy-paste the modified URL into the address bar of your browser window and press enter.

Step-3: If the URL of the resulting page doesn’t display ‘gclid=test’ then auto tagging is not working properly.

 

Enabling E-Commerce Tracking in Google Analytics account

In order to get ecommerce data (revenue, transactions, average value, e-commerce conversion rate, RPC, ROI and Margin) for your Adwords campaigns in Google analytics reports you need to enable E-Commerce Tracking in your Google Analytics account and add e-commerce tracking code to your order confirmation page(s).

You can learn more about enabling and setting up e-commerce tracking from here.

Related Post: How E-Commerce Tracking works in Google Analytics – Ultimate Guide

 

Enabling ‘Adwords Cost Source’ settings in Google Analytics account

In order to import cost data from Google Adwords into Google Analytics account, you must allow your Google Analytics account to receive the cost data in the first place.

 adwords-cost-source

 You can do this by following the steps below:

  1. Sign in to your Google Analytics account.
  2. Select the account and then the web property that contains the profile you want to edit.
  3. Click the ‘Admin’ tab.
  4. Click on the profile whose ‘Adwords Cost Source’ settings you want to enable.
  5. Click on the ‘Profile Settings’ tab.
  6. Under ‘AdWords Cost Source Settings’, check the ‘apply cost sources’ checkbox.
  7. Click on the ‘Apply’ button.

 

Enabling ‘Data Sharing’ settings in Google Analytics

 data-sharing-settings

 In Google Analytics, your Data Sharing Setting must be set to: “with other Google products only” so that Google Analytics can share its data with Google Adwords. You can learn more about ‘Data Sharing settings’ from here.

 

 Importing Google Analytics metrics to Adwords reports

Once you have linked Google Adwords and Google Analytics account, you can then add Google Analytics columns to your Adwords reports:

 ga-metrics-adwords

 You can do this by following the steps below:

1. Sign in to your Google Adwords account.
2. Click on the ‘Campaigns’ tab
3. Click on ‘Campaigns’ or ‘Ad Groups’ sub-tab
4. Click on ‘Columns’ drop down button > ‘Customize Columns’
5. Click on ‘Google Analytics’ (as shown in the image above)
6. Click on ‘Add’ or ‘Add all columns’ (as shown in the image above)
7. Click on the ‘Apply’ button

 ga-metrics-adwords2

 You can now see the Google Analytics metrics in your Adwords reports.

 

Importing Google Analytics goals and transactions to Adwords conversion tracking

Not every action (conversions) that we want visitors to perform on our website can be tracked by Adwords default conversion tracking. For example, if you don’t have a Contact Us form with a “Thank You” page on your website, but have an email link instead which opens up client’s outlook email, then it can’t be tracked by default Adwords Conversion tracking. To work around this problem you need to track click on the ‘email link’ as Event Goal in Google Analytics and then import the goal from Google Analytics into Adwords conversion tracking.

Once you have linked the Adwords and analytics accounts, enabled data sharing and auto tagging, you can then import Google Analytics goals to Adwords conversion tracking by following the steps below:

1. Sign in to your Google Adwords account.
2. Click on ‘Tools and Analysis’ tab > Conversions
3. Click on ‘Campaigns’ or ‘Ad Groups’ sub-tab
4. Click on the “Import from Google Analytics’ button
5. Select the conversions you want to import and then click on the ‘Import’ button

 analytics-conversions-ready

 

Creating a separate profile for tracking Adwords campaigns in Google Analytics

Filtered profile is a great way to apply advanced customization to a report without the risk of messing up the original data. Filtered profiles are most useful if your analytics account has got data sampling issues. The data that is filtered at a profile level is unsampled. For example if you apply the advanced segment ‘paid search traffic’ to the ‘All Traffic’ report (so say you can determine the ‘e-commerce conversion rate’ of your paid search traffic) then your report data will be sampled. But if you create a filtered profile which shows only ‘paid search data’ then your report data will be unsampled.

Note: Data sampling issues are big problem only for high traffic websites (which get more than 10 million pageviews/month) and can cause highly inaccurate reporting of metrics. Your metrics from ‘conversion rate’, ‘revenue’ to ‘visits’ could be anywhere from 20% to 80% off the mark if you have got data sampling issues.

 

You should use enterprise level analytics tool like ‘Google Analytics Premium’ to minimize data sampling. But do remember that even GA premium cannot fully eliminate data sampling. Therefore you have to use filtered profiles regardless of the analytics tool (GA Standard or GA premium) you use if you have got data sampling issues. To learn more, check out this post: Google Analytics Data Sampling – Complete Guide

Once you have a separate profile just for tracking Adwords campaigns you can do all type of report customization without the risking of messing up the original data in the main profile. For example by default Google Analytics group all Google Search Partners for Adwords (like AOL, ASK, mywebsearch etc) as google/cpc. So you will never know which Google search partner is actually sending traffic and conversions. You can fix this problem by creating and applying following two filters one after the other to your Adwords Profile (courtesy of: Brian Clifton).

 google-search-partners1

 google-search-partners2

 Once you have applied these filters, wait for few hours and then go to Traffic Sources > Sources > All Traffic Report. You can now see all the Google search partners which are sending traffic to your website:

google-search-partners3

 

 Phase-3: Analysis

Once you have configured your Google Analytics and Google Adwords account and have got at least 4 weeks of data in your reports, you are in a position to do some serious analysis of the Adwords data. You can now analyze Google Adwords campaigns’ performance both through Google Analytics and Google Adwords reports.
Let us start with Google Adwords reports in Google Analytics:

 

 Adwords Campaigns Report

 adwords-campaigns

You can access the Adwords Campaigns report by going to Traffic Sources > Advertising > Adwords > Campaigns

Through this report you can measure the performance of each Adwords campaign (and their ad groups and targeted keywords) on different types of devices: all devices, non-mobile devices, high-end mobile devices (like smart phones) and tablets in terms of:

  1. Site usage (visits, pages/visit, avg. visit duration etc)
  2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
  3. E-Commerce  (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)
  4. Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).

 

Note: You can click on a campaign name (in the Adwords Campaign report) to check the performance of all the ad groups in that campaign. You can click on an ad group name to check the performance of all the keywords in that ad group.

Through the ‘clicks’ tab you can get information about clicks and the keywords spending. Most of you are already familiar with metrics related to site usage, goal conversions and ecommerce. These metrics are pretty standard and are available in almost every Google Analytics report. But the metrics related to Adwords Cost data and ROI is unique. So let us explore these metrics:

 adwords-campaigns2

Here,

Visits is the number of visits from Google Adwords ads

Impressions is the number of times your Adwords ads were displayed

Clicks is the total number of clicks on your Adwords ads

 

Data discrepancy between Adwords and Google Analytics reports

Here one thing that you need to keep in mind that the number of clicks on your ads generally don’t match with the number of visits in your Adwords reports. Following are the reasons for such data discrepancy between Adwords and Google Analytics reports:

1. Google Adwords track ‘clicks’ whereas Google Analytics track ‘visits’ (or web sessions).

2. A single click on Adwords ad can result in multiple visits.

3. In a single visit a user can click on the same Adwords ad multiple times.

4. Google Adwords can report clicks even if the javascript, cookies or images are turned off by a visitor. Google Analytics can’t report visits in such case.

5. If the landing page of the Adwords ad doesn’t contain Google Analytics tracking code, then Google Analytics will not be able to track visits but Google Adwords can still track clicks.

6. Redirects in landing pages may prevent the Google Analytics Tracking code from being executed. In this case Google Analytics will not be able to track ‘visits’ but Google Adwords can still track ‘clicks’.

7. Google Adwords can filter invalid clicks but Google Analytics can’t filter invalid visits because of such clicks. So Google analytics will track and report visits even for invalid clicks.

8. Google Analytics treat visits from untagged or improperly tagged Ad URLs as organic visits instead of paid search visits.

9. Profile filters may remove some of the ‘visits’ data from your Google analytics reports.

10. If visitors bookmark the landing page of your Adwords ad along with the GCLID parameter, then Google Analytics report visits from such bookmarks as paid search visits instead of direct visits.

 

Cost is the total costs of clicks on your Adwords ads.

CTR (or Click through Rate) is the number of times your ads were clicked/number of times your ads were displayed. So CTR= (Clicks/Impressions) * 100

Through CTR you can determine how much visible and convincing your Adwords ad is for targeted keyword and ad position. You can improve the CTR of your Adwords ad in two ways:

  1. Bid for higher ad position (increase your Max. CPC)
  2. Write a more convincing ad copy

 

CPC is the average cost you paid for each click on your ad. CPC = total cost/total clicks

RPC is the average revenue you generated for each click on your ad. RPC = (Total revenue generated through Adwords ads+ total goal value generated through Adwords ads)/total clicks on the ads.

Note: Your RPC numbers could be all zero in your Adwords reports in Google Analytics if you have not set up Goals and Goal values and/or you have not enabled ecommerce reporting.

ROI is the Return on Investment of your Adwords campaigns. It is calculated as:
ROI= {(E-Commerce Revenue+ Total Goal Value) – cost}/cost

 

Margin is the ‘Gross Margin percentage’ of your Adwords campaigns. It is used to estimate the gross profit of the Adwords campaigns. It is calculated as:
Margin = {(E-Commerce Revenue+ Total Goal Value) – cost}/E-Commerce Revenue

If Gross margin percentage for a campaign is 62% and the revenue generated by the campaign is $50000 then the estimated gross profit for the campaign would be: $50000 * 62% = $31000

 

ROI reported by Google Analytics for Adwords campaigns is incorrect as it doesn’t take into account your profit margin. So the correct ROI would be:

ROI= {(E-Commerce Revenue+ Total Goal Value) * Profit Margin – cost}/cost

ROI of 0% => means no profit, no loss. You spent ‘x’ and earned ‘x’ in revenue.

ROI of 100% => means you spent ‘x’ and earned ‘2x’ in revenue.

ROI of 1000% => means you spent ‘x’ and earned ‘11x’ in revenue.

ROI of -100% => means you spent ‘x’ and earned 0 in revenue.

 

Important Points about Negative ROI

  1. It is common for brand new campaigns/keywords to show negative ROI for first few weeks. Therefore you should keep this in mind before you pause or delete your negative ROI campaigns/keywords.
  2. You can assess keywords’ profitability through RPC and ROI metrics.
  3. You should never assess the performance of keywords/campaigns on the basis of few clicks or few days’ worth of data as some visitors can take several days or weeks before they turn into customers.
  4. Your ROI numbers can be all zeros in your Adwords reports in Google Analytics if you have not set up Goals and Goal values and/or you have not enabled ecommerce reporting.
  5. Make sure that your Adwords and Google Analytics accounts are set to the same currency. Otherwise the ROI data won’t be accurate.

 

Adwords Keywords Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords in Google Analytics.

Through this report you can measure the performance of the Adwords keywords (i.e. the keywords you are bidding on in Adwords) and ‘Ad Content’ on different types of devices: all devices, non-mobile devices, high-end mobile devices (like smart phones) and tablets in terms of:

  1. Site usage (visits, pages/visit, avg. visit duration etc)
  2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
  3. E-Commerce  (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)
  4. Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).

If you are running your Adwords on Google Display network (a network made up of millions of websites which have partnered with Google to display relevant Adsense ads on their web properties) then the keywords report will show ‘content targeting’ in the keywords column:

content-targeting

Google Analytics group all the keywords which resulted in clicks on your ads (placed on the websites which are part of Google Display Network) as ‘content targeting’. The best way to measure the performance of the keywords grouped together as ‘content targeting’ is by selecting ‘placement domain’ as a secondary dimension:

content-targeting2

Placement domain is the website where your ads were displayed and clicked. So when you select secondary dimension as ‘placement domain’ you can determine the performance of your ads on a particular domain.

 

Adwords Matched Search Queries Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Matched Search Queries in Google Analytics.

Through this report you can measure the performance of Matched search queries (keywords which actually triggered the ad) and match types (broad match, phrase match and exact match) in terms of:

  1. Site usage (visits, pages/visit, avg. visit duration etc)
  2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
  3. E-Commerce  (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)

This report becomes super useful when you add ‘keyword’ as secondary dimension. In this way you can determine which keywords you are bidding on and which are actually triggering the ads:

 Matched-Search-Queries

Adwords Day Parts Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Day Parts in Google Analytics.

Through this report you can determine most profitable Hours and Days of the week for your ads and then re-schedule your ads and adjust your bids accordingly. For example, if an ad generates significant amount of revenue during certain hours of the day say between 12 pm to 4pm, then you can raise your bids during those times.

 

Adwords Destination URLs Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Destination URLs in Google Analytics.

Through this report you can measure the performance of your Adwords ads’ landing pages in terms of: site usage, Goal Conversions, E-Commerce and Clicks.  This report becomes super useful when you add  ‘Landing page’ as a secondary dimension to verify whether the destination URL is taking the visitors to the right landing page.

Through this report you can also measure the performance of Ad Distribution Network in in terms of: site usage, Goal Conversions, E-Commerce and Clicks. You can determine which method of distribution (Google Search Network or Google Display Network) is more effective.

 

Adwords Placement Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Placement in Google Analytics.

Through this report you can determine how your ads are performing on ‘Managed placements’ and ‘Automatic Placements’ of Google Display Network. Managed placements are those websites on Google Display Network which you have manually selected to display your Adwords ads. Automatic placements are those websites on Google Display Network which have been selected by Google to display your Adwords ads.

 

Adwords Keyword Positions Reports

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords Positions in Google Analytics.

Through this report you can determine where your Adwords ads ranked on Google SERP (Search Engine Result Page) when the visitors clicked on it and what is the impact of the ranking position in terms of site usage, goals and ecommerce. Through this report you can determine the ranking positions which deliver best performance.

 

 Conversion Metrics used in Google Adwords

 conversion-metrics-adwords

There are two types of conversions available in Google Adwords reporting interface:

1)      Click Conversion – It is the conversion triggered through a click on an Ad. A click conversion can be Conv. (1 per click) or Conv. (many per click).

Conv. (1 per click) => one click on an ad resulted in only one conversion.

Conv. (many per click) => one click on an ad resulted in multiple conversions. However these conversions must have occurred within the next 30 days following the click on the ad.

 

2)      View through Conversion – It is the conversion triggered through an impression (viewing) of a display network ad that has not been clicked in the last 30 days.

 

If a user clicks on your ad and purchase an item and signup for a newsletter then:

Conv. (1 per click) = 1

Conv. (many per click) = 2

==================

If a user clicks on your ad and purchase an item then later again come back to your site by clicking on the ad again and sign up for a newsletter then:

Conv. (1 per click) = 2

Conv. (many per click) = 0

=================

If a user clicks on your ad and purchase items then later again come back to your site directly and sign up for a newsletter then:

Conv. (1 per click) = 1

Conv. (many per click) = 2

 

Competitive Metrics used in Google Adwords

 Competitive-Metrics-Adwords

Competitive metrics are some of the most useful metrics available in Google Adwords. Understanding of these metrics is critical in order to optimize Google Adwords campaigns.

Search Impr. Share – It is the search impression share for your ads on the Google Search Network. It is calculated as:

Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on the Google Search Network

Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low search impression share. You need to make sure that you keep the search impression share as high as possible.

 

Search Exact Match IS – It is the search impression share for your ads on the Google Search Network when the search terms matched the keywords (on which you are bidding) exactly or very closely. It is calculated as:

Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on the Google Search Network for search terms that exactly (or very closely) matched your keywords

Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low exact match search impression share. You need to make sure that you keep the exact match impression share as high as possible.

 

Search Lost IM Share – It is the search lost impression share. It is the estimated percentage of impressions your ads didn’t receive on Google Search Network because of poor Ad rank. You need to make sure that you keep this impression share as low as possible.

 

Display Impr. Share – It is the impression share of your ads on Google Display Network. It is calculated as:

Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on the Google Display Network

Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low display impression share. You need to make sure that you keep the display impression share as high as possible.

 

Display Lost IS (Rank) – It is the display lost impression share. It is the estimated percentage of impressions your ads didn’t receive on Google Display Network because of poor Ad rank. You need to make sure that you keep this impression share as low as possible.

 

Relative CTR – Through this metric you can get an idea of how your ads are performing on Google Display Network in comparison to the other ads on the same websites. It is calculated as:

CTR of your ad / average CTR of others ads running on the same websites

A relative CTR of 1x means that the CTR of your Display ad is equal to the average CTR of others ads running on the same website(s).

Other Posts you may find useful2 Powerful Reasons you should STOP doing CRO Right NOW

 

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  • https://twitter.com/#!/kmadhav Sourabh Rana

    How many days you take to create this awesome blog post ?

    it is really very good … I am in search of complete guide to Google analytics .. kindly provide this also.

    • seohimanshu

      It took more than 2 weeks to write this post. It is impossible to write a blog post which could be considered as complete guide on Google Analytics. I will probably have to write a book then :)

      • https://twitter.com/#!/kmadhav Sourabh Rana

        waiting for this book :)

  • Sueli Vieira

    Great post!.

  • patxi

    wow! thanks indeed

  • http://twitter.com/pradeepnairjc pradeep nair

    Incredible, hats-off to Himanshu for such an awesome post. Bookmarked it, as it would take at least 1 week for me to go through all of this, lol

  • http://www.facebook.com/profile.php?id=100005298247472 Ravi Kumar

    I got everything here what I was looking for. Now a day Google Adwords is the good source to connect in your niche and customers.

    • seohimanshu

      Glad you find the post informative.

  • http://twitter.com/mashmarketing Gail Mullard

    hi Himanshu, could you point out the code that goes in the first filter alongside Field A – Extract A. Referral is in left box, what goes in the right hand box?

  • http://emarketelite.com/ Arnaud

    Great article! :-)

    Small question regarding the Analytics filter to only show PPC traffic. I can’t read the value of the referral box: ^http://([^*) ? There’s some things missing.

    And for the second filter is it: (.+) and $A1 (via $B1)
    Thanks for your help!

    • seohimanshu

      The value of the referral box is: ^http://([^/]*)

      The values for the second filter is:

      Campaign Source:(.+)
      Custom Field 1: (.+)
      Campaign Source: $A1 (via $B1)

  • shiv bhaker

    Hi Himanshu,

    Awasome post, But Please Change Ad rank Formula As it has been Changed Now..Ad Rank will also take into account a third component: the expected impact from your ad extensions and formats

    • seohimanshu

      ok. Thanks for the heads up.

  • radhika

    it is very clear to undestand thank you

    • seohimanshu

      glad you find the article useful.

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  • Kamil

    Thank you for this guide. Excellent!
    For the Adwords view in Google Analytics what is difference between using Include Campaign source PPC and the custom filter shown in your example?

    • seotakeaways

      I am not sure, i understand your question.

  • Pawe?

    I have a question and im wondering if you can help me out a bit with it. I would be grateful if you could.

    Which of the following metrics would allow you to assess AdWords campaign profitability?

    a) CPM
    b) CTR
    c) Revenue Per Click
    d) Margin
    e) ROI

    all of them are correct? I’ve watched the Google Analytics Digital Fundamentals and read through the GA Helpcenter and i’m still not sure .

    • optimizesmart

      ROI.

  • http://shaynechamplin.com/ Shayne Champlin

    Hi Himanshu. Thanks for this awesome guide by the way.

    My question: What do you mean by a filtered profile? Are you talking about creating another view and then applying specific filters to that view?

    Thanks for all that you do!
    Shayne