Published By:
311

If you’re not measuring your return on investment (ROI) for pay-per-click (PPC) advertising campaigns, you might as well be standing on the street corner burning money.

This seems like a head-smacking, common sense statement, but you may be surprised how many businesses set up their keyword ad campaigns, sit back, and expect customers and their money to just waltz right in. You wouldn’t set next year’s operating budget for retail without setting projections, so why should you expect to do just that for your online advertising? The question then becomes how to do so?

Determining ROI for PPC campaigns can be as simple or as complicated as you would like to get, but it all boils down to four basic elements. For each product for which you have a PPC campaign, you need to start with:

  • Ad cost
  • Clicks
  • Number of sales (conversions)
  • Revenue

ROI for these campaigns is comprised of ad profit, cost per acquisition (CPA), and ROI, and the formulas are straightforward:

  • Ad profit = revenue – ad cost
  • CPA = ad cost / number of sales
  • ROI = (ad profit / ad cost) x 100

CPA is a great place to start setting goals, as it represents the price you pay to acquire each customer. The simple question is: How much are you willing to pay for each sale?

It’s important to remember that the highest ROI does not always mean highest profit. Would you rather make 10% profit on sales of $1,000 or 50% profit on sales of $100? Obviously you’d take the former, so just looking at the ROI isn’t always the best indicator of PPC success. You should also look at your profit per day. Personally, I’d take a 10% profit on sales of $500 per day over 50% profit on sales of $500 per month. The key is to plot your data so you can analyze trends and more accurately forecast for the future. It may seem like a lot of work, but it’s better than wasting money on campaigns that aren’t bringing in ROI.

There are a number of PPC ROI calculators, all of which are easy to use. If you’re running a fairly high number of ads and keywords, it really behooves you to chart and project your own ROI internally. But these simple online calculators are a good place to start.

Specific to Google AdWords: Quality Score

Google AdWords adds another ingredient to the PPC quiche: quality score. Quality score dictates ad position in Google results, as well as minimum keyword bid. In general, the higher the quality score, the better ad position and the lower the maximum keyword bid. Factors that figure into quality score include keyword click-through-rate (CTR), ad CTR, quality and relevance of landing page, and others.

More Resources

A more detailed explanation of Google AdWords Quality Score can be found at Google’s AdWords support site.

Search Engine Journal has a great article breaking all of these factors down further, and explains each component in detail. They also created a PPC ROI calculator that is easy-to-use.

In our next installment, we’ll look at how usability affects search engine optimization.

revcontent-98%-of-sites-get-denied-are-you-in-the-2%
311

Sponsored Resources

Want more resources

View all Resources




Most Read

Contributors

Our publication contributors combine decades of experience with unique insights into the content promotion and distribution industry.
Chad Pollitt Partner, VP of Audience Native Advertising Institute
Pam Didner Global Content Marketing Strategist & Author
Chirag Ahuja Head of Marketing WorkflowMax
Jayson DeMers Founder & CEO AudienceBloom
Erik Deckers Professional Writer Pro Blog Service
Bernie Borges CEO Find and Convert
Jessica Stephenson VP Marketing ExactHire
Michael Ferrari Marketing Consultant Pen Cap Online Marketing
Larry Alton Freelance Writer and Editor
David Tile Founder & Director Nimble Media
Jay Baer Marketing Strategist, Speaker and Author
Kelsey Libert Marketing VP & Partner Frac.tl
Dan Steiner Co-Founder & CEO Elite Legal Marketing
Joydeep Bhattacharya Relevance Contributor SEOsandwitch.com
Jonah Bliss Founder CMO ContentIntent
Andrea Lehr Promotions Supervisor Fractl
Fernando Labastida Co-Founder Content Propulsion
Dan Moyle Creative Dir. Marketing AmeriFirst
Dennis Yu Chief Technology Officer BlitzMetrics
Arnaud Roy VP Marketing Augure
John Rugh Copywriter/Content Marketing Specialist
Gini Dietrich CEO Arment Dietrich
Justin Spicer Content Researcher, Producer & Editor
Michael Becker Marketing Support Spec. Teradata
Anna Johansson Freelance Writer
Amanda DiSilvestro Content Editor and Writer HigherVisibility
Sujay Maheshwari Founder & CEO Netcurate.com
Kelly Coulter Online Marketing Strategist
Taylor Radey Senior Consultant PR 20/20
Rodger Johnson Public Relations Leader & Consultant
Simon Penson Founder & Managing Dir. Zazzle Media
Danielle Wolter Nolan Co-Owner
Jason Falls Social Media & Public Relations Thought Leader
Joe Beccalori CEO Interact Marketing
Fernando Cuscuela Founder & CEO Everypost
Kelly Smith Content Manager CourseFinder
John McTigue EVP Kuno Creative
Yogita Arora Content Strategist Zoomph
Jordan Teicher Associate Editor Contently
Jonathan Crowl Digital Marketing Writer & Editor
Brian Honigman Marketing Consultant, Writer & Professional Speaker Skyword
Katherine Halek Content Strategist Signazon.com
Amanda Drinker Dooley Community Product Marketing Manager Netline
Anton Rius Digital Marketing Consultant More Than Metrics
Matthew Zajechowski Outreach Manager Digital Third Coast
Kevin Bailey Co-founder DigitalRelevance
Peter Chen Digital Marketing Consultant DigitalRelevance
Luana Spinetti Multi-Specialized Freelancer
Kyle Harper Writer Skyword
Elad Natanson Founder appnext
Maël Roth Content & Inbound Marketer Park7
Quin Woodward Pu Marketing Director Audienti
Greg Shuey Co-Founder Stryde
Douglas Karr Founder & CEO MarTech.zone & DK New Media
Jean Bansemer CEO My Web Writers
Owen Andrew Journalist
Luke Kintigh Global Content & Media Strategist Intel
Dan Fahrner Director of Marketing Services SmallBox
Asaf Rothem Marketing VP & Partner BrightInfo
Jonha Richman User Acquisition Manager

In case you missed

Read more of the latest news and insights from thought leaders in content promotion and distribution.

Subscribe


Get the latest content promotion news and insights everyday.

Champion Sponsor

Relevance is proud to present our Champion Sponsor that helps make our site possible.

Cision Logo

© 2017 Relevance | Content Promotion News & Insights

Connect with RELEVANCE

Thank you for subscribing Your subscription has been confirmed.