CPC:
This is short for “cost per click” this is the amount you pay each and every time someone clicks on your ad that is running. There are several things that can affect the price you pay. Some of them are quality score, this is basically Google’s score of your landing page. It means with the ad’s you are running how in line is your website. If you are selling toothpaste you had better make sure the page you are sending people to is very much about tooth paste, right down to the url, title tags, and meta descriptions. The higher your quality score the lower your cost per click. Another way you can manage the cost you pay each time someone clicks is by having a better click through rate. You can control this by having great ad copy and bidding on the correct keywords.
CPA:
This is short for cost per acquisition. This is the real number, the one that means the most. It can tell you if any PPC campaign is profitable or not. Basically it means what did it cost you to make a sale. Now, sale can mean whatever you want it to, it really depends on what the goal of your campaign is. If you are simply wanting people to sign up for a mailer that can mean a sale too. You have to know what each sale costs you and how profitable each sale is. The goal is to be in the black of course, sometimes that takes a little while and most pay per click campaigns start out losing money. The key is to be patient and let the natural progression of testing, and refining take place to work towards profitability.
CTR:
This is the short way of saying click through rate. This is basically the number of clicks over the number of impressions. Say for example your ad showed 100 time and received 10 clicks. That would give you a CTR of 10%. The better the CTR the better the price you will pay per click and you can increase this by working on your ad copy as well as bid on better terms. It is tough to say what a good CTR is, it really varies by market and vertical. The short way of looking at it is whatever percent is profitable for you is what you should shoot for as a baseline, and then always try improving.
Conversion Ratio:
Now conversion ratio is often confused with your cost per acquisition. The truth is it really is just the percentage of clicks that turn into sales, leads, or basically do whatever you had intended them. If you had 100 clicks and 8 people filled out your form for more information you would have a 8% conversion ratio. Again, like CPA a good conversion ratio is strictly tied to return on investment. At whatever percentage you are profitable is the baseline you should shoot for. There are a lot of ways to improve your conversion ratio with different ad copy, bidding on more targeted terms, and using things like split testing.
ROI:
Most business owners know this one by heart return on investment. This is what drives every single marketing decision, or at least should. The only advice we have on this is to take the long view, and not get too excited by really high or really low points. Pay Per Click advertising is a battlefield that can often change, your competitive landscape will change often and you have to allow yourself time to adjust as new competition joins the fight or as others drop out. Let the overall return on investment drive all your marketing decisions, but give them time to level out.