We provide all our clients with our return on investment (ROI) conversion methodologies to ensure we are deploying effective methods to ensure a positive ROI t with us.
Here’s a fundamental question that many advertisers ask:
Are my investment or efforts helping me make a profit?
To help get the answer, you’ll want to understand your return on investment (known as ROI). ROI measures the ratio of your advertising, search engine marketing, internet model, costs to profits — how much you’ve spent on advertising compared to how much profit you’ve made from those ads.
ROI is typically the most important measurement for advertisers because it shows the real effect that your investments have on your business. While it’s helpful to know the number of clicks and ad views you get, it’s even better to know how your ads relate directly to the success of your business.
Why it matters
Here are just a few of the benefits of knowing your ROI:
Make more informed decisions about your budget and bid amounts so that you’re spending the right amount to meet your business goals.
Understand which ads and keywords affect your profit the most so that you can focus your efforts and advertising budget on those things that you know are likely to bring money in.
How much profit you’ve made from your ads compared to how much you’ve spent on those ads. Return on investment (known as ROI) measures the ratio of your profits to your advertising costs.
Let’s say you have a product that costs $100 to produce, and sells for $200. You sell 6 of these products as a result of advertising them on AdWords. Your total sales are $1200, and your AdWords costs are $200. Your ROI is ($1200-($600+$200))/($600+$200), or 50%.
ROI is typically the most important measurement for advertisers because it shows the real effect that AdWords has on your business. While it’s helpful to know the number of clicks and impressions you get, it’s even better to know how your ads are contributing to the success of your business.
To help measure your AdWords ROI, you’ll need to track conversions, actions that you want your customers to take on your website after clicking your ad such as a purchase, sign-up, or download. Try Conversion Tracking or Google Analytics, free tools to help you track conversions in your account.
Here’s one way to estimate the ROI of your campaign: take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs.
ROI = (Revenue – Cost of goods sold) / Cost of goods sold