Online marketing is now essential for businesses as the internet becomes more integrated in our daily lives. Pay per click advertising is one of the most effective form of online advertising today. PPC campaigns draw traffic from search engines by displaying ads relevant to what is being searched. When clicked, these ads take visitors to a sales page or landing page.

There are many pay per click publishers operating today, however Google Adwords is currently the most popular service and has the most market share. PPC is run in a fast-paced medium wherein information can be accessed instantaneously. This allows you to monitor your ads performance and quickly implement tweaks to increase their effectiveness.

Raw numbers from traffic counts are the basis of measuring ad effectiveness, and will tell you exactly what types of visitors are arriving at your site. While this data will only give you an overview of the total volume of traffic, you will be able to drill down the dates of these traffic counts and match them up to the days that your ad campaigns were run.

Conversion rates are perhaps the most critical metric for your PPC campaign. Understanding how many clicks turned into a sale will give you a chance to determine how much it costs you to generate a lead from your campaign, and you can measure this over a period of time to determine the effectiveness of your ads. Keep in mind that measuring conversions can take many forms.

Conversion can be in the form of a sign-up, submitting contact info, or a download from your site, according to Joseph Thornton, author of "The Online Advertising Playbook". You can consider these activities as conversion only when they directly relate to your PPC campaigns.

Taking the analysis of conversion rates further, it would be better if you can measure which keywords are bringing in the most sales. If you have this information, you can then build your campaign around the keywords that sell the most.

Lastly, you need to determine the ad rankings within your industry. This help you decide which type of ad placement you will avail. Most ad networks offer two options on ad placement: a regular spot and a featured or special spot. Google Adwords offers something similar. They place the regular ads on the sidebar column and rotates them to give everyone a fair exposure. They also offer the more expensive "Featured Ads" placement.