Ratio quick reference:
- 1.0-1.5: Too conservative – probably missing out on conversions.
- 1.5-2.0: Target range – this is good, well-balanced keyword management.
- 2.0-2.5: Fairly aggressive – some overspend detected.
- Over 2.5: Very aggressive – a lot of overspend detected.
The Lin-Rodnitzky Ratio is an industry standard PPC/AdWords benchmark that answers the question “how are we doing?” as it relates to keyword management. Revere automatically monitors this ratio and sends an alert when the results are out of the target range.
Here’s what the results mean:
Only converting queries are getting traffic. There probably isn’t enough testing going on, which means it’s likely that the account is missing out on some opportunity to grow and get more conversions.
1.5-2.0: Target range
A good amount of the budget is being spent on queries that are converting and there is a reasonable level of experimentation on other queries. This is a nice indication that the account has a well balanced approach to managing keywords.
2.0-2.5: Fairly aggressive
The account is spending more 2-2.5 times as much on non-converting queries as on ones that are converting. There is very likely room to optimize keyword match types, bidding, etc to reduce the spend on all of these queries that aren’t driving a result.
Over 2.5: Very aggressive
The account is spending a lot on queries which aren’t converting. The higher this number goes, the more aggressive, and potentially mismanaged, this account may be.
How the Lin-Rodnitzky Ratio is calculated:
Lin-Rodnitzky Ratio = (CPA of all search queries) / (CPA of search queries with at least 1 conversion)
More background on the Lin-Rodnitzky Ratio:
The Lin-Rodnitzky ratio is a standard benchmark used in the PPC industry. The ratio was developed by Will Lin and David Rodnitzky of 3Q Digital.You can read the Lin-Rodnitzky whitepaper here to learn more about how it works and why they created it.
The intention of the formula is to provide a very simple guide to understand whether keyword management in an account is conservative, aggressive, or just about right. It compares the overall cost-per-acquisition to the cost-per-acquisition of just the queries that have performed (i.e. converted). A result of 1.5-2.0 is generally thought to be a good result, indicating a balanced approach to managing keywords. Anything higher means the approach is more aggressive than maybe necessary. And anything lower means that the account is being managed in a way that’s so conservative that growth opportunities might be missed.
As with any of our alerts, feel free to contact us with feedback. We can even make adjustments to help the alerts work better for your account, so don’t hesitate to reach out.