If you are spending your hard-earned money on a PPC campaign, then you also need to verify if your Pay Per Click ROI is at optimum levels. You can then decide on whether to continue with your present campaign or change your strategy to improve your ROI.
There are several ways to calculate or determine your ROI and you need to select and follow one method out of the ones mentioned below for an accurate assessment.
In simple terms ROI or Return on Investment is calculated as [Profit - Cost] / Cost = ROI%. ROI is thus displayed as a percentage.
While your profit or revenue figures can be easily retrieved, calculating costs can be a little tricky. You need to consider much more that direct PPC costs. In other words, you need to factor costs incurred for order processing and delivering products, credit card processing costs, salaries paid to employees involved in selling your products, equipment costs including servers, technical expenses, internet costs, etc. Merely calculating click fees is not enough since it will not paint the true ROI picture.
Since a successful PPC campaign requires you to maximize your revenues by converting maximum visitors into successful conversions by clicks obtained at the lowest costs, you need to include all these metrics into your calculations. You need to consider Profit Per Click and Profit Per Impression to determine actual ROI.
You will have to extract figures related to impressions, clicks, as well as your total cost and total sales amount. You then need to deduct your total cost from your total sales amount and can include other costs as mentioned above for a clearer picture.
If you wish to determine your Profit per Click then you will need to divide this figure by Profit by Clicks. Dividing the figure by Profit by Impressions will help you determine your Profit per Impression. The resultant figure will help you decide if you can proceed with the campaign with your best possible Profit Per, or indulge in additional tests to extract a better value.
You can try the above methods to determine your Pay Per Click ROI and can also decide on cost parameters to include in the calculations based on your accounting methodology.