Launch is step one. Performance management is the weekly habit that turns spend into learning.
Learning Objectives
By the end of this chapter, you will be able to:
- Define and calculate the core PPC metrics: CTR, CPC, conversion rate, CPA, and ROAS.
- Calculate break-even ROAS from profit margin.
- Diagnose performance problems from metric patterns.
- Run a weekly optimization routine.
Core Metrics
| Metric | Meaning | Watch for |
|---|---|---|
| Impressions | Times shown | Eligibility / rank |
| CTR | Clicks ÷ impressions | Ad relevance |
| CPC | Cost per click | Competition + QS |
| Conv. rate | Conversions ÷ clicks | Landing + offer |
| CPA | Cost ÷ conversions | Efficiency |
| ROAS | Revenue ÷ ad cost | Ecommerce health |
Also track Quality Score components and search terms (what people actually typed).
Worked Example: Calculating the Metrics
An online cosmetics store reports one month of Search ads:
| Data | Value |
|---|---|
| Impressions | 200,000 |
| Clicks | 5,000 |
| Cost | Rs. 100,000 |
| Orders (conversions) | 150 |
| Revenue | Rs. 450,000 |
- CTR = 5,000 ÷ 200,000 = 2.5%
- CPC = 100,000 ÷ 5,000 = Rs. 20
- Conversion rate = 150 ÷ 5,000 = 3%
- CPA = 100,000 ÷ 150 = Rs. 667
- ROAS = 450,000 ÷ 100,000 = 4.5 (Rs. 4.50 revenue per Rs. 1 of ad spend)
Break-even ROAS
ROAS on its own does not show profit. If the store’s gross margin is 30%, then:
Break-even ROAS = 1 ÷ margin = 1 ÷ 0.30 ≈ 3.3
At ROAS 4.5 the campaign is profitable: gross profit = 450,000 × 0.30 = Rs. 135,000, minus ad cost Rs. 100,000 = Rs. 35,000. A campaign with ROAS 3.0 would be losing money even though it “looks” positive.
Reading metric patterns
| Pattern | Likely cause | Action |
|---|---|---|
| Low CTR | Ad not relevant or not compelling | Rewrite ads; tighten keywords |
| High CTR, low conversion rate | Landing page or offer problem | Fix message match, speed, trust, CTA |
| Rising CPC | More competition or falling Quality Score | Improve relevance; review bids |
| Many irrelevant search terms | Match types too broad | Add negatives; tighten match types |
Optimization Playbook
- Kill waste: negative keywords from search terms
- Improve RSA assets: pin sparingly; test benefits vs features
- Fix landing message match and mobile speed
- Shift budget to ad groups with acceptable CPA
- Re-test bids/audiences only after tracking is clean
Case study: Weekly optimization for a Chitwan hospital OPD campaign
Week 1 data: CTR healthy (6%), CPA high because many clicks were “nursing vacancy” and “salary.”
Actions: Add job negatives; rewrite ads to “Book OPD appointment”; landing CTA = call + WhatsApp; mark both as GA4 key events.
Week 3 pattern: CPC slightly higher, CPA down because clicks were patients, not job seekers.
Second insight: Saturdays converted; late-night clicks did not (no staff). Ad schedule trimmed → better CPA without creative changes.
Nepal practice: Optimize to qualified inquiries (appointment booked), not form fills from competitors researching you. Align marketing and front-desk definitions of a lead.
Summary
PPC performance is managed weekly using a small set of metrics: impressions, CTR, CPC, conversion rate, CPA, and ROAS, plus Quality Score and the search terms report. ROAS must be compared with break-even ROAS (1 ÷ margin) to judge profit. Metric patterns point to causes: low CTR suggests ad problems, high CTR with low conversions suggests landing page or offer problems. The hospital case shows that qualified leads, not cheap clicks, are the real goal.
Key Takeaways
- CTR = clicks ÷ impressions; CPC = cost ÷ clicks; CPA = cost ÷ conversions; ROAS = revenue ÷ cost.
- Break-even ROAS = 1 ÷ gross margin.
- Use metric patterns to diagnose whether the problem is the ad, the page, or the targeting.
- Optimize for qualified leads agreed with sales or front-desk staff.
Discussion Questions
- Why can a campaign with a ROAS of 3 still lose money?
- How should marketing and sales agree on what counts as a qualified lead?
- Why did the hospital’s CPA fall even though CPC rose?
Exam-Style Questions
Short answer
- Define CTR, CPC, CPA, and ROAS.
- What is break-even ROAS?
- What does a high CTR but low conversion rate suggest?
- What is a search terms report used for?
Long answer
- A campaign has 150,000 impressions, 3,000 clicks, a cost of Rs. 60,000, 90 orders, and revenue of Rs. 240,000. Calculate CTR, CPC, conversion rate, CPA, and ROAS. If the gross margin is 25%, is the campaign profitable?
- Explain a weekly optimization process for a PPC campaign, with examples of actions for common problems.
