Pay-per-click advertising is a highly effective marketing tool to reach a larger audience. Although, to understand how it works for you, there are certain formulas and metrics to calculate how these efforts are showing results. Two of the most relevant formulas you need are Cost Per Click (CPC) and Return On Investment (ROI), however, within these categories, there are formulas that help you determine the performance of PPC. In this blog post, we will discuss two ways you can determine the results of your PPC.
This is one of the most important formulas to first determine your PPC campaign. Cost per click will tell you the exact cost of every click. Here’s the formula: Total cost/ number of clicks
For example, if you spent $350 on an entire campaign and generated 300 clicks, your cost per click would be about $1.17. This means each potential lead from those clicks would only cost you $1.17. (Which is considerably low compared to the average CPC).
Another formula that is within the CPC category is the click-through rate. The CTR tells you how many people see the ad versus how many actually click, and you can calculate it with this formula: (Number of clicks/ number of impressions) * 100
For example, if your campaign was $250, generated 900 clicks and 200 clicks, your click-through rate would be 2.2 percent. This calculation is important to measure how effective your ad is. The lower your click-through rate percent is, then you should consider how the ad can be improved to increase its performance.
ROI gives you tangible number-based data about the benefits of your PPC efforts and tells you how many sales are being generated from your campaign. Measuring the ROI data is important to give you invaluable insight into which campaigns are performing by bringing in leads, driving conversions, and increasing sales. The formula to calculate is: (Revenue generated – cost of campaign) / cost of campaign * 100
So, if your $250 campaign generated 200 clicks that resulted in $275 in sales, then your ROI would be 10 percent.
The one difficulty of measuring ROI on a PPC campaign is you can’t easily track each sale back to the campaign. For example, if someone clicked on your ad, scrolled through your site, and called you to make a sale, then your ROI wouldn’t be calculated automatically through the campaign. One way you can oversee all your sales is with call tracking. This provides you with different phone numbers to use on different landing pages based on the keyword. So you are tracking all the call sales and the online sales. Even if someone did surf through your site through the PPC campaign, and called to make a sale, then your campaign would count as a result of that sale.
When it comes down to it, your data is always important to measure because you want to know if your campaigns are working correctly. The two most important metrics to focus on when analyzing your PPC data are cost per click and return on investment. In addition, there are a number of different factors you have to consider if you want to see the whole picture, and those formulas undergo cost per click and return on investment. Use these formulas to track your campaigns! You’ll see how effective they work.
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