The Lin - Rodnitzky Ratio


What Kind of PPC Account Manager Are You…?


The simple aim of PPC optimisation, is to produce the highest return from your ad spend that you can.

That usually entails reducing CPA while maximising conversions.

Those two aims are in tension of course… but then that’s where the strategy comes in.

The next factor to throw into the mix, is expansion.

If all you wanted to do was maximise ROI as a %, you’d only want to run your single best keyword, with your single best ad, to one, tightly defined audience / device type / location…

When the few available clicks come in, they’ll be gold!

…but not many clicks will come in… so there won’t be many conversions, and that awesome ROI won’t deliver a whole lot of practical benefit to the business you’re advertising.

So here’s the second tension. How tight, lean, and CPA/ROI driven do you want to be, or – on the other hand – how experimental, expansive and volume-focussed?

This question is crucial to our strategy, yet it’s a question that we don’t often consider in a methodical way.

PPC Strategists (myself included) often go by ‘feel’ on this. We might ask our client whether they’re more focussed on CPA or volume, but we won’t usually get a quantifiable answer.

If you recognise this in your own experience of PPC, you’ll appreciate the elegant work done by Will Lin and David Rodnitzky of Q3 Digital, which has produced a neat, simple way of telling exactly where an account lies on the scale from conservative to cavalier.

It’s called the Lin-Rodnitzky Ratio, and it works like this:

To work out the Lin Rodnitzky Ratio for your account, see this video on how to check your L-R score, or follow the steps below:

  • Take a long enough date range to show substantial conversion data, representative of how the account generally performs
  • From all search campaigns, navigate to keywords > search terms
  • Make sure you have the cost/conv. column in place
  • Create a filter to show only search terms that have had greater than 0 conversions
  • Read off your cost/conv. from the total row. That’s your first input
  • Read off your cost/conv. from the filtered search terms row. Here’s your second input
  • Divide the first by the second, and behold your LR Ratio

77.61 ÷ 58.72 = 1.32 

The logic of using search terms as the basis is that this is the rawest measure of what you are actually spending your PPC money on. If keywords are you telling Google what searches you want to trigger your ads, search terms are Google telling you what searches actually trigger your ads.

So comparing how freely you spend on all activity in relation to the proven, converting elements of it, is close to perfect as a quick insight into where an account sits on the conservative-expansive scale. The higher the number, the more ‘freely’ the account is spending…

What’s a good Lin Rodnitzsy Ratio?

The creators of the scale suggested the following interpretation:

“healthy accounts typically have a Lin-Rodnitzky Ratio between 1.5 and 2.0.”

As a rough guide – these are their guideline to where an account stands for each range of scores.

1.0-1.5: The account is conservative. There is very low wasted spend, but the account is likely missing out on a lot of incremental conversions, most of which are likely to still be highly profitable for the business.

1.5-2.0: The account is well-managed. There is a combination of consistent winners that always bring in sales and experimental queries that are being tested to identify growth opportunities.

2.0-2.5: The account is too aggressive. There are too many queries getting clicks that are not driving conversions. This is either due to excessive use of broad match, a lack of attention to the account, or a lack of rigorous analysis of metrics.

2.5+: The account is being mismanaged. Money is being wasted daily, and simple changes can save the business a lot of money.”

Having used this excellent formula for a while, I personally think these groupings are a bit on the conservative side – and would call anything up to 2.25 healthy under normal circumstances (but hey… maybe I’m a PPC hippy!).

Regardless, there are some good reasons why a healthy account might come out low on the scale, and conversely it could be completely appropriate for an account to be more wide-ranging and ‘prospective’ than average – giving a higher LR score – depending on the circumstances.

For instance, interpretations of a good score may shift depending on conversion value and frequency. There are campaigns that see rare but ultra-high value conversions. For these, almost every conversion may come from a ‘new’ search term, and (although it might be wise to track a higher-frequency micro-conversion…) specific considerations like this should be taken into account.

That said, if you find that your accounts generally sit outside the middle range of L-R scores, then you can probably infer that you are conservative or cavalier as an account manager. An interesting insight to have…

As well as a good sanity check on your own accounts, this formula makes for a good, quick indication of an account’s potential (either to save money or to be more ambitious…) when running an audit. If you fancy an in-depth discussion with your prospective client, it could also make for a nice talking point!