There are dozens of metrics you'll hear about after a campaign has started. Whether it's cost-per-click, click-through-rate, impression share or Return On Ad Spend, there are a few core metrics to understand.
Five Core Metrics To Understand:
Click-Through-Rate: This is the primary metric you need to understand. It affects the quality score of your ads because it tells Facebook & Google how relevant your ads are, which in turn affects your cost-per-click (CPC). Your impression share, cost-per-conversion and conversion rate are other metrics it affects as a byproduct.
2. Conversion rate: The percentage of people who click your ad and turn in either leads or purchasers. Depending on the platform your conversion rate will be different. With Google you can expect a conversion rate of 10% or more because people are actively looking for services to do business with. Facebook on the other hand will have a lower conversion rate because the customer base is not actively looking for your product, so someone needs to be enticed to purchase, whether that's through promotion or discount. You can expect a conversion rate between 1-3%.
3. Impression: This metric determines your ad being shown. 3 impressions mean your ad has been shown 3 times. This doesn't mean 3 separate people, and on Facebook you can expect someone to see your ad more than once over an extended period of time. The importance of the metric is twofold: On Facebook you get charged per impression (1 impression can be as low as $0.0001), and on Google the more impressions it takes to lead to a click the higher your cost-per-click will be. The goal is always to have a low and lower click-through-rate, which as outlined above lowers your costs.
4. Cost-per-click: What you pay for a click tells you something about your industry on Google. The higher the cost per click you pay the more competition there is. On Google you need to bid on what you're willing to pay for a click, or you can let Google pay whatever it costs. Click-through-rate (CPC) can fluctuate on any given month, day or hour. Your goal should always be to lower your CPC by improving your CTR, which is done by making your ads as relevant to a searcher or viewer of your ad as possible.
5. Impression share: This is Google-specific, and it tells you the percentage of the time your ads are displayed for any given search. Having a better CTR will lead you to pay less per click, which in turn leads your budget to be available for longer through the day. This then leads to a higher impression share, which leads to a larger pool of potential customers seeing your ad.
