The ROI calculation is imperative to comprehensive PPC; however, many marketers do not understand it. The marketers indulge in optimizing their campaigns, considering only cost-per-conversion without giving ROI a thought. They merely look upon Ads, keywords, and conversion rates.
The approach helps in getting leads; however, the real intent of the campaign, which is selling the products is not sufficed. The PPC should not be used only for generating leads but also to calculate the real return on the investments made.
PPC is meant to generate leads with the best price conversions. PPC is essential to estimate and calculate success.
ROI is the return on investment. It is calculated based on the profit attained on the investment made in the campaign.
In online marketing terminology, ROI is basically Return of Ad Spend, which PPC revenue subtracted from the PPC, divided by PPC Cost.
ROAS is simple to calculate, and PPC marketers often do this on the spot.
What is Return on Investment (ROI)?
ROI is like ROAS, which is profit subtracted by cost and then divided by control, and ROAS differs in the way value is defined.
PPC click spend, along with various other parameters like the cost of product and the delivery of goods, comprise the total cost of the PPC campaign. The cost of goods returned by consumers and the processing costs also add.
Thus, lead generation should also account for fixed costs like the equipment, staff cost and servers, etc. to keep the site up.
Profit Per Click or Profit Per Impression
PPC entails optimising the profit your website makes by successful lead generation and conversion with the best possible rates. Thus, the profile per Click and Profit per Impression should be considered.
The metric is based on search methods. The conversions should be done by getting the clicks for the best price and then selecting the right SEO keywords, bringing your ads to the searchers, and then making a purchase the offered service or product. Thus, the profit per click/ impression is a more sophisticated method for calculation. However, once you understand the technique, you can easily use it with the help of spreadsheets.
The data of impressions, total cost, and sales value, along with clicks, should be handy. When you calculate the profit, you need to minus the total cost from the total sales value. Later you can simply account for the overhead costs.
The profit per impression is calculated by dividing the total profile but the number of impressions. For-Profit per Clicks, the total profit is divided by profit by clicks.
Once you have consolidated the results, you can decide whether you want, you can choose to either continue using a keyword or ad that provides the best profit per click or impression.
Most Effective Way
There is not just a single sure shot method to get the most of for your money when it comes to PPC. Thus, it is advisable to find the way which suits you the best and pay around with it. Consistency is the key; in case you switch between the various methods, you would not see the desired results. You would only be able to quantify your PPC comprehensively when you stick in one way.
You must pick the method which is contextual to your work and just continue using it. With continued use, you shall get expertise in calculating PPC ROI; then, you would seamlessly figure out your campaign’s success and the future steps.