Calculating Return On Investment From PPC
Pay-per-click, or PPC campaigns are the best method of marketing there is when it comes to making and measuring your return on investment (ROI). PPC campaigns are different from other means of online marketing, , you only pay when someone clicks on an ad and because of the locations of your ads, those who click are much more likely to purchase your product or service. This can make PPC the best ROI in terms of marketing over the internet.
To figure out your ROI on a PPC campaign, subtract the PPC cost from the profit, and divide by the cost to get the percentage.
For example:
You spend $400 on pay-per-click ads, and make $2000 in profit. Your formula will work like this:
2,000.00 — 400.00 / 400.00 = 1600.00 / 400.00
1600.00 divided by 400.00 = 4.
You’ve made a return on investment of 400 percent.
Of course, the above is laid out only in terms of profit over specific advertising costs, and you will have other costs involved with your sales, such as website maintenance and hosting, credit card processing, returns, and employee salaries. To know the full ROI from a specific campaign, consider all costs associated with running your PPC campaign and all those associated with the specific sales from that campaign in your formula.
Calculating the return on investment for your individual campaigns will help you learn which keyword phrases and placements work best and which areas of your PPC advertising are in need improvement.
