PPC Analysis: How to Make Sense of Your Reports

Many clients aren’t sure which metrics to prioritize during their regular PPC reviews. In fact, this is one of the most common challenges with marketing analytics.

But don’t worry, we have an easy way for you to master your PPC reporting. While your PPC agency is diving into all the nitty-gritty details, you only need to focus on three tiers of key PPC metrics to stay on top of your PPC performance and evaluate your agency’s work.

Tier 1: Bottom-Line / Profitability Metrics (ROI, ROAS)
Tier 2: Ad Performance Metrics (Conversions, Conversion Rate, Cost per Action)
Tier 3: Troubleshooting Metrics (CPC, CTR)

Let’s take a closer look at each of these.

These Are the Three Tiers of PPC Metrics You Should Constantly Keep an Eye On

Tier 1: Bottom-Line / Profitability Metrics

As a business, your top priority should always be two key metrics: ROI and ROAS.

Return on Investment (ROI)

ROI is the most important KPI in PPC. It’s calculated by dividing your net revenue by the cost of your investment, and the result can either be positive or negative. A higher ROI means greater profitability.

However, calculating ROI accurately requires precise net revenue and investment data for each reporting period. This can be tricky for lead generation clients like law firms, real estate agencies, or any B2B business with a longer buyer’s journey, as they often struggle to integrate these numbers into their PPC analysis. Additionally, ROI takes into account all costs—not just ad spend but also agency fees, software, MarTech costs, landing page development, and more. When ROI becomes difficult to calculate, we rely on the next tier of Ad Performance Metrics to gauge success.

Return on Ad Spend (ROAS)

ROAS is similar to ROI, but with a few key differences. It’s calculated by dividing the revenue generated by the campaign by the cost of the ad spend, then multiplying that result by 100.

In simpler terms, ROI measures profitability, while ROAS measures sales or lead generation. ROI works best for long-term PPC analysis, whereas ROAS works well for monthly or quarterly reports.

Tier 2: Ad Performance Metrics

Once you’ve reviewed your profitability metrics, it’s time to dig into the specifics of your PPC reporting—namely, how many conversions you’re generating each month, what your conversion rate is, and how much you’re paying for each conversion or action.

Conversions: Amount, Types, and Quality

While the number of conversions matters, it’s not the only factor to consider. Always evaluate the type and quality of the conversions you’re getting each month. Are your main conversion actions happening through form submissions, phone calls, or e-commerce purchases? Your conversion breakdown should align with the channels that drive the most profitability.

For example, plumbing companies typically value phone calls over form submissions, while online stores focus on purchases rather than calls. It’s better to have fewer, high-quality conversions that you can track effectively than a large number of conversions that don’t provide useful insights. Whenever possible, use call tracking and analytics tools to monitor all conversion types and quality.

Conversion Rate

Simply put, the conversion rate is the percentage of ad clicks that result in conversions. A low conversion rate can signal issues like irrelevant clicks, a poorly targeted keyword list, or an underperforming landing page. Constant testing and optimization are key to improving your conversion rate—after all, you want every click to count!

Keep in mind that conversion rates vary by industry, so it’s important to check annual industry benchmarks to set realistic expectations.

Cost Per Action (CPA)

The cost per action (CPA) is the average amount you pay for each conversion action, such as a phone call, form submission, purchase, or add-to-cart action.

As a business, it’s important to establish a target CPA range for each conversion action you’re focusing on. How much are you willing to pay for a phone call? Or a form submission? For lead generation clients, CPA is almost synonymous with the cost per lead. By factoring in your sales numbers, you can pinpoint the ideal CPA that allows you to keep your ads profitable.

Tier 3: Troubleshooting Metrics

The first two tiers of PPC metrics give you a solid understanding of whether your ads are performing well. But these next metrics offer deeper insights into your industry, competition, and opportunities for improvement.

Average Cost-Per-Click (CPC)

Your average CPC is the amount you pay for each click on your ads. It can vary widely by industry—some businesses pay more than $100 per click, while others see clicks for under $2. If you’re in a competitive niche, aiming for the lowest CPC isn’t always the best strategy, as it can lead to lower-quality clicks.

High-cost keywords are typically competitive for a reason—they often signal high commercial intent and are more likely to convert. It’s usually better to pay for 10 high-quality, expensive clicks that convert than 100 low-cost clicks that don’t lead anywhere.

Knowing your average CPC helps set realistic expectations for your Google Ads costs. Your daily ad budget should cover enough clicks based on your average CPC to generate meaningful conversions. If your daily budget is lower than your average CPC, your ads may struggle to perform effectively.

Average Click-Through Rate (CTR)

Your click-through rate (CTR) measures the ratio of impressions to clicks, giving you insight into how likely people are to click on your ad after seeing it. A low CTR can be caused by several factors, such as:

• Weak ad copy or better-performing competitors
• In search ads, intense competition may mean you’re not showing up in top positions on the SERP
• For social ads, your creative might not be grabbing the attention of your target audience

Further PPC analysis can help pinpoint the issue, but improving your ad copy—especially headlines, descriptions, calls-to-action, and ad assets—is a good place to start.

Low troubleshooting metrics signal core strategic or technical issues in your ads and offer excellent waypoints for identifying improvement opportunities.

What questions should I be asking my PPC agency?

Q: How do we compare to our competitors?

Your competition in the ads auction may differ from your physical competitors. It’s determined by your keyword list and location targets. Regularly reviewing your competition and auction list helps you understand how you stack up against others and what differentiates your offerings. Read more about Google Ads Auction Insights: Understanding Your Competition.

Q: What can be done to improve our performance?

If your Google Ad campaign isn’t working, Focus on optimizing campaigns that aren’t performing as well. Ask your agency what steps can be taken to:

• Reduce the cost per conversion
• Increase the conversion rate
• Enhance the number or quality of conversions

Possible improvements might include:

• Adding or removing keywords
• Revising ad copy
• Updating images, videos, or graphics
• Enhancing ad extensions and assets
• Testing different bidding strategies
• Adjusting location targets
• Improving the landing page
• Simplifying the conversion path
• Offering a more compelling product or service

If your current campaigns are delivering excellent results, be cautious with changes; even minor tweaks can affect performance. Consider launching new campaigns or exploring additional ad platforms to complement your strategy.

Q: Where is our budget being wasted, and where is it being spent effectively?

If your location targeting isn’t precise, some areas may be draining your ad budget without yielding conversions. Investigate why certain locations aren’t resonating and decide whether to continue advertising there. This could involve specific states, cities, or even zip codes.

Q: What trends or user patterns are evident in the search terms or PPC analysis report?

The Search Terms report reveals how users search for your products or services, including specific phrases, questions, and industry terms. Understanding whether customers use questions to start their search or if they’re familiar with industry jargon can provide valuable insights for refining your marketing and website content.