These days marketers and businesses excessively rely on digital marketing to achieve their goals. Finding leads, generating interest, qualifying leads, and ultimately converting them into paying customers – all of it can easily be done online. And pay-per-click (PPC) digital advertising is an efficient way to do so. Brands across the globe invest in comprehensive PPC as it builds brand awareness, drives more web traffic, and produces more high-quality leads.
However, like all other online marketing strategies, it is essential to keep an eye on the results and tweak your campaigns for maximum effectiveness. This also includes knowing that you are getting the expected return on your investment in PPC.
ROI is a critical success metric. Let’s find out how you can calculate the ROI for your PPC campaigns and even improve it.
There are three commonly-used ways to calculate your campaign’s success:
Calculating ROI as part of a PPC campaign management shows its actual effect on your business. At the same time, it is vital to check vanity metrics like clicks and impressions to measure PPC success.
As a marketer, you already know that click costs are just one part of the equation. You also need to factor in a range of other expenses when calculating the total cost of a PPC campaign. Some of these include:
All of these expenses affect your campaigns’ total cost. Next, retrieve the total revenue so you can calculate your ROI.
The simplest formula to calculate ROI is:
(Profit – Cost) / Cost
Generally, advertisers refer to ROAS when they talk about ROI because the difference between the two is whether you consider your business’s cost of carrying out PPC advertising business.
ROAS is calculated as:
(PPC Revenue – PPC Cost) / PPC Cost
The result is written in a percentage form. For instance, if your PPC sales are $1,200, while you paid $600 as PPC click costs, the ROAS will be 100%:
($1200 profit – $600 cost = $600) / $ 600 cost = 1.0 = 100%
The ROAS formula is very straightforward, and you can gauge your overall PPC performance and make optimization easy. ROAS is used in bid optimization algorithms to calculate these bids with the help of the bid management platforms.
The calculation of all possible costs, including those to generate leads and sell products, is still insufficient. PPC helps you maximize your profits bringing in maximum visitors and sales at a reasonable cost.
Conversions are highly dependent on the right keywords being used in ads, getting clicks at a good cost, showing ads to searchers, and converting visitors to buyers.
To calculate profit per click/impression, you need extensive data for clicks, impressions, total sales, and total cost. First, calculate the profit by subtracting the total cost from total sales (you can also factor in the overhead costs).
Use this formula to calculate the profit per impression:
Profit / Impressions
Use this formula to calculate the profit per click:
Profit / Click
With these calculations, you can figure out which metric to go for with the keyword or ad or carry out further testing if the information still seems insufficient.
Digital marketing is tricky because it’s constantly evolving. You have to be on your toes and continuously improve your numbers to stay ahead in the race for PPC and search ad domination.
If you find out that the return on investment isn’t as good as you expected or could be better, it’s time to improve your game.
Here are a few ways you can increase your PPC ROI:
It is essential to target the right audience for your ads, regardless of the time you display the ads to them. Since audiences differ from another for every ad, there might be ads that follow a better trend at a specific time.
Generally, ad networks let users schedule the ads for the time and days that best suit their needs. For instance, if a local garment store’s ad performs better during a FIFA game, go ahead and pick the same schedule for all your ads.
PPC ads depend on keywords, even more so than they do on demographics. You can understand the customers’ intent with the keywords they use in search or the websites they visit. You can use this data from online activity and enhance your PPC campaigns’ effectiveness using the exact keyword matches.
The exact keyword match will result in the ad being displayed when that phrase is used without any other words. Since you limit an ad’s reach in this way, you have to make sure you use this approach properly so the people who watch the ad are the ones who will most probably buy your products.
For instance, a car dealer selling a Honda Civic EX must use the exact “honda civic EX price” keyword in their ad. Since this is a particular keyword, anyone who searches for it must be a potential buyer of the car, and as a result, the perfect target audience for your car ad.
Even though you have a target audience base, there will be different groups within them who will respond differently to your ads for several reasons. As a result, it is essential to make multiple campaigns so you can cover all of them.
If you resort to using a single campaign to appeal to all these people, you will have a poor ROI. Marketers should carefully design various ads, considering the kind of consumers who would like to use your products and the type of ad that will best explain their value to them.
A great way to improve your ad campaigns is through negative keywords. This way, your ad won’t be shown to uninterested or unrelated audiences. For instance, a men’s shoe store should use the negative keyword “women” because why should the business pay for a wasted click or view’?
Similarly, a luxury brand that sells expensive goods should use the negative keywords “cheap,” “sale,” or “affordable” to avoid showing the ad to those who want cheaper or imitation brands.
While getting a click on an ad from a customer is huge, your job doesn’t end over there. Ad clicks aren’t enough to generate revenue, and as a marketer, you can improve your ROI with features like videos on your landing page. This helps to increase conversions of customers who click an ad and get there.
Furthermore, you can test your landing page to see if you can easily convert customers once they arrive. When you design targeted landing pages, you allow users to reach a specific page, depending on the clicked ad.
Marketers using Google AdWords should focus on improving their ad’s Quality Score to increase their ROI. The frequency with which the consumers click on an ad and convert after clicking on it affects the score.
Successful ads give more money to Google, and as a result, high-quality score ads are placed higher. It is best to see your ad’s Quality Scores to observe what aligns the most with your target audience.
It is essential to include keywords in your ad copy and target information to capture your viewer’s attention. These words are the ones they consciously or subconsciously look for in an ad when they scan it.
While it depends on an ad’s format, generally, keywords are bold to make them stand out to increase attention and consequently get people to click on your ad.
You cannot improve your ROI and campaigns unless you thoroughly track their results. You can make variations in an ad or its targeting in several ways to affect outcomes. Try out various combinations and track results to determine which target audience and ad type are the most effective.
For instance, you can use variations like different CTAs or distinct background colors for your ads.
The return on investment from pay-per-click is an essential measure of success since it shows how well you are doing in your campaigns and how much you need to improve.
There are various ways you can measure the ROI and track their results to figure out how you can improve them to make money on your PPC campaigns. Try different methods and see which one aligns with your audience and ads the most. Stick to it instead of going back and forth to ensure a steady approach.