How to Evaluate the ROI of PPC Campaign

For those of you who do not know what PPC and ROI stand for well PPC is pay per click campaign and ROI is Return on investment. Those that know what they mean may find it very confusing to relate ROI with PPC at times. The good news is, below are certain steps that you can use to calculate the return on investment without any problems at all.

The mistakes made by most advertisers

It is seen that advertisers try to depend on statistics as cost incurred for conversion and the rates of conversion. You always have the option of choosing the ads and the keywords that perform the best and let things flow, but there is much more to the calculation.

Steps to calculate return on investment

Profit for every click

The amount of profit generated for every click is a sign of how the amount of conversions per landing page. If your website is not generating too much profit, then you could make some improvement to the landing pages that will help increase sales and the ROI. The process of calculation is very similar to that of profit earned for every impression; all you have to do is substitute the clicks for impressions. Profit for every single impression shows the relevance of your keywords and the attractiveness of your ads.

Profit for every impression

This will tell you the amount of revenue that you earn from every ad or the number of times your advertisement has been viewed. This usually indicates the number of clicks that your advertisement is generating. This is a very effective calculation as it gives a clear picture of how the various aspects such as a landing page, ad copy and selection of keyword are performing. The calculation is quite simple all you have to do is perform a subtraction between total revenue and total cost; this will give you your profit. After this perform a division and then you will get the profit for every impression.

Calculation for ROI

This calculation is even more accurate as it considers all the costs that are incurred from converting prospective customers into a loyal customer. For example, you employ people who look after the number of visitors on the landing page and try to generate sales. Your website may also have a section saying contact us that will prompt a response from an employee.

There are many ways that some other costs come into the total investment that you are undertaking to attract new customers and it does not matter how the lead is being generated. For this calculation you have to monitor all the leads that are being generated through PPC and also estimate other investments that are undertaken to convert leads to a buying customer. At this particular point in the calculation is similar for Roas. Simply perform a subtraction between all the costs and the investments and divide by the cost of each lead. However, factors like salary of employee, the cost of development, server cost and processing fees for credit card should be counted too.

Conclusion

All of these methods mentioned above will give you the best estimation of the amount of revenue that your website is generating from the PPC campaigns and this will also help you understand the performance of your campaign. If you see that your campaign is not doing well then it is time to go back to the drawing boards and scrutinize your campaign and make changes. You could also consider hiring professionals PPC Company to help you out. So if you want maximum return on investment, then follow these steps very closely.