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Return on investment ( ROI ) is the profit made from the advertising money you spent. At a super basic level, if you spend $5,000 on search engine advertising and generate $15,000 in new sales, that's a darn good return on your advertising dollars, right? Your ultimate goal, however, is to increase the total volume of sales at the lowest cost per customer. Assessing a deeper level of profitability enables you to reallocate ad budgets and efforts across the search engines, your product line, and even the campaign components for each product. Figuring out your ROI isn't hard. You'll need access to the following data for your analysis. (For simplicity's sake, I address the ROI of one product throughout this chapter. You'll likely sell multiple products, or possibly services.)
All you need now is to do a little math. Follow the simple formulas below using the data you identified above.
Let's look at an example. Pretend a company sells a $15 product. The company spent $500 on one search engine advertising campaign and received 2,000 clicks. If 1% of these visits produced sales, then this campaign wasn't profitable. At a 5% conversion rate, it was:
This example assumes a company is selling only one product. An ROI report should be created by search engine, product, and associated keywords per product. The spreadsheet in Figure 14.1 shows a more comprehensive ROI report. Figure 14.1. Sample ROI spreadsheet organized by search engine, then product, and the associated keywords.
Tip
Ideally, you'll include ad listings (titles and descriptions) and landing pages if you're testing more than one per product or keyword. Notice that I've set up the campaign to organize the campaigns by search engine. You could instead organize it by product or keywords. |
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