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Three techniques of calculating PPC ROI

by anonymous

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Calculating the return on investment (ROI) is one if the basic doctrines of PPC, but still there are many people who do not give it importance and few of them do not understand it. There are many advertisers who do campaigns that are merely based on rate per conversion, creating an advertisement, keyword analysis and much more.<br>

These factors might fulfill your needs if you are just collecting leads and not into selling any kinds of products or services. These services will help you in generating more leads. But even if you are using <a href="">PPC services</a> just for lead generation you must calculate the return on your investment that you have made for marketing your company or its products.<br><br>


<b>The different ways of calculating PPC ROI are as follows……..</b><br>

Before looking into the ways of calculating PPC ROI, let us have a look as to what ROI is. ROI is nothing but return on investment. The term has derived from the finance world where it is used regularly. If you have studied account, you will be familiar with this term. Now let’s have a look as to how ROI is calculated.<br><br>


<b>Return on the amount spent on advertisement:</b><br>

Most of the advertisers talk about ROI they actually refer to ROAS? (Return on ad spends). ROAS nothing but PPC revenue sans PPC cost divided by PPC cost. It is depicted in terms of percentage.<br>

Let’s look at an example:<br>

Your sale from PPC is $1000, you paid $500 for the advertisements, and then your ROAS will be 100%.<br>

($1000 profit - $500 cost = $500)/ $500 cost = 1.0 = 100%<br>

The best part about ROAS calculation is the way it is calculated. You will not need a pen and paper to do the calculation. ROAS is the best way to start your PPC calculations.<br><br>


<b>ROI (Return on Investment):</b><br>

ROI is quite similar to ROAS i.e. profit- cost/ cost. The only difference is in the way it is calculated. You not only pay for the advertisements but the cost is also applicable on making the products and fulfillment of the order. Costs are also applicable on credit card processing and returned goods. You also need to employ people whom you have to pay at a regular basis.<br>

If you are just into lead generation where you are not selling any products, you still have costs. You need to pay to the servers, technicians and the equipments. Apart from that you also need to spend on marketing automation.<br><br>


<b>Profit per Click and Profit per Impression:</b><br>

<a href="">PPC management</a> is all about increasing sales at the best price. It is a bit difficult to calculate profit per impression or click. But once you get a hold of it, you will find it easy to generate on a spreadsheet.<br><br>


<b>Which one is the best?</b><br>

 There are so many ways to calculate PPC. You cannot figure out a single method and tell it to be the best one. But the calculations are made using the technique that our clients prefer.<br>

But I will recommend that you choose a particular method and stick to it. Do not switch between metrics.<br>

So which one do you prefer?

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