Understanding Metrics: Conversions per Impression

Recently there has been talk of a new metric within the PPC industry: conversions per impression. I first read about this metric from Chris Crompton of Search Engine Land.

In my view, this metric represents the overall effectiveness of your PPC campaign. The click-through rate (CTR) measures how relevant your ads are to user search queries. The conversion rate tells you the percentage of visitors who complete your predefined goals once the ads are clicked. These are important metrics, but it may be time to consider conversions per impression (CPI) as well. Let’s take this example:

Of the 500 times my ad is seen (the “impression”), 20 searchers deem it the most relevant and click””a CTR of 4%.  Of these 20 visitors, 2 find my landing page or site meets their expectations and they complete my predefined goals, resulting in a conversion rate of 10%.

Individually, these metrics tell part of the story, but not the whole story. Measuring the success of this ad using the CPI metric, I find that 2 users convert out of the 500 times the ad is seen, thus leaving a CPI percentage of 0.4%.

So how might this metric come in handy?  Let’s use a timely example.  I search for “New Orleans Saints Super Bowl Merchandise” and see these ads:

Ad #1 receives:   2,000 impressions, 150 clicks, 15 conversions

CTR = 7.5%          Conversion Rate = 10%

Ad #2 receives:   2,500 impressions, 100 clicks, 25 conversions

CTR = 4%              Conversion Rate = 25%

Ad #1 gets more visitors to the site, but ad #2 proves to have the better post click experience.  Using our new metric, CPI for each is:

Ad #1:   0.75%
Ad #2:   1.00%

Ad #1 may have the better CTR because the offer of 15% off the purchase is more appealing than having to spend more than $99 to get free shipping. If someone is just looking for a $20 hat, the offer in the first ad is more beneficial.  However, once visitors get to each site, the conversion rate tells us that ad #2 does a better job of turning clicks into customers.  Perhaps the landing page of the second ad showcases more products than the first ad and has an easier user experience.  Ultimately ad #2 does a better job from the start of the search process to the completion of the conversion.  However, CTR and conversion rate are still important metrics as they break down the success of these ads.

I admit that I do not know what an ideal CPI percentage is (or if one is known).  I do know that this metric is gaining traction and needs to be considered by PPC managers.  I encourage your feedback about the importance of this metric and if/how you are working it into your campaign reporting.

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