Small business SEM campaign metrics

In the “What is Online Advertising?” post, I explained what are the essential and most cost effective online advertising mechanisms for small businesses. One of these is Search Engine Marketing or SEM.

So you decide to tell the world about your product or service by paying Google via its AdWords product to place ads in search results pages. The cool (and super useful) thing about advertising online is that you can track your cost and, possibly, if you have your Website setup properly, revenue from the ads. You don’t even know how to program to do this.

You advertise on Google and you get some customers and make some money. Life is good.

Or is it?

A common question small businesses have, especially if they’re starting out with online advertising, is this: “What objective method is there to see the return on investment of my advertising campaigns?” That is, how do you know that you’re getting the most bang for your sacred small business buck?

Evaluating the results of your SEM campaigns aren’t that difficult really.

There are 2 components to evaluating whether you are getting the most bang for your advertising buck:

1. What are your goals? That is, why are you in business? Possible questions you should ask yourself (if you haven’t already) are: do you want to reach a certain level of income and maintain it at that level? Or do you want to keep growing your business forever? If you want to grow your business, then at what rate? How is the income decision going to affect family time (if you have a family around)? What about social and community activities? These are questions only you can answer as a small business owner?
2. Once you know what your goal is, you need to come up with some metrics which help you achieve that goal. For example, you know that you want to make x dollars per month to achieve your goal. Some metrics to consider are:
   • Number of clicks
   • How much revenue was generated (RPC), if you have your Website setup to measure revenue.
   • Cost per click (CPC)
   • Profit per click (which is RPC – CPC)
   • Total profit, which is profit per click multiplied by the number of clicks

You’ll probably want to look at these metrics either weekly or, if you don’t get that many customers from your SEM campaigns, monthly.

Obviously, these are pretty basic. But they will give you a first pass at evaluating whether you are getting what you thought you will be getting from SEM. That is, these metrics will allow you to become more sophisticated in evaluating your business and to start asking more detailed questions.