One of the questions that will pop up at some point in the journey between a PPC account manager and client is, “Am I generating a return on investment?”
If you have that covered, this question won’t bother you. But, if the answer is not THAT clear-cut for you or your client–which is probably why you’re here, reading this–then maybe it is time to go beyond the surface of PPC ROI and how to calculate it.
This article aims to explain in plain language what PPC ROI is, why it matters, different ways you can calculate and track it, and how you can optimize your campaigns for a better return on investment.
What is PPC ROI?
The official definition of ROI (Return on Investment), according to Investopedia, is:
“The net gain or loss generated on an investment relative to the amount invested.”
Applied to the PPC context, ROI is defined as:
“The net gain or loss generated specifically on an ad campaign relative to the amount of money invested.”
In other words, PPC ROI measures how successful your campaigns are in generating revenue for you or your client compared to how much they cost. It can be expressed as a percentage to help you decide which campaigns are most effective and which ones need more work.
Why is PPC ROI important?
The value of PPC ROI doesn’t lie only in its ability to assess the effectiveness of a campaign but also in its ability to help marketers decide where to allocate future budgets.
Let’s see an example of this.
Let’s say you manage a PPC campaign for a clothing store client, and they have an overall budget of $5,000.
You’ve identified two keywords: “shoes” and “bags.” After analyzing the performance data, you realize that “shoes” have an ROI of 20% while “bags” have only 5%.
With this information, you can allocate more of the budget towards “shoes” since it provides a higher return on investment.
Additionally, looking at the ROI of each keyword also helps you identify which keywords are not yielding an adequate return and should be dropped or optimized further.
How To Calculate PPC ROI?
Now it’s time for the so-intimidating part for some who believe you have to be a Baldor in math to calculate PPC ROI. Fortunately, figuring this is a very simple equation:
- Step 1: Determine your total revenue from PPC ads.
- Step 2: Subtract your total PPC ad costs from your total revenue.
- Step 3: Apply the following formula:
ROI = (Revenue – Cost) / Cost x 100
Following the example of the clothing store from before with a budget of $5,000 and a total revenue of $7,500:
ROI = (7500 – 5000) / 5000 x 100
Therefore, the ROI from this campaign is 50%.
To put it another way, for every $1 spent on the PPC campaign, the store has made an additional $0.50 in revenue.
That solid return on investment indicates that this campaign successfully drove sales.
How To Improve Your PPC ROI?
On the other side of the coin is when the PPC ROI is low or negative (no reason to panic if this is the case; it happens all the time).
If that’s your situation, then it’s imperative to look at your PPC campaigns and figure out why they are not converting.
Some tips you can take into practice are:
1. Refine Your Targeting
One of the most common issues with low ROI in PPC is targeting ads too broadly.
The more targeted your ad campaigns can be, the better results you’ll get and the higher your return on investment.
2. Improve Your Ads Copy
As simple as it might seem, improving the copy of your ads can have a big impact on ROI.
Regularly reviewing and testing new ad copy is important to ensure you get the best results with each campaign.
3. Test and Refine Your Landing Pages
Your landing pages must be optimized for conversions for your PPC campaigns to be profitable. Make sure you’re testing different versions of your landing pages to see which ones produce the best results.
4. Prepare Your Client’s Account For Converting
You need to ensure that your client’s account is set up for success, so it’s important to review the structure and settings of their account. This includes auditing campaigns, ad groups, ads, keywords, etc., to ensure they’re optimal for maximizing ROI.
PPC ROI Reporting: The Secrets to Client Success
Once you’ve optimized your PPC campaigns for ROI, it’s time to start reporting your successes to clients. Here are some secrets to effective reporting:
Track PPC ROI with AdClicks’ Dashboards
Use AdClicks dashboards to track your clients’ paid search efforts in real-time.
AdClicks provides pre-built dashboard templates to integrate with your clients’ metrics from Google Ads, Microsoft Ads, and other platforms. This will give you a comprehensive view of their paid search performance so you can identify areas for improvement and make adjustments on the fly.
Give Clients Access to Their PPC Data
This will allow them to monitor their campaign progress at any time without relying on you for updates. It also shows that you’re committed to transparency and accountability.
Deliver Regularly Scheduled PPC Reports to Clients
PPC reports are a great way to inform them of their campaign performance and show them how their investment pays off.
Automate PPC Reporting for Clients
This will free up your time to focus on optimizing campaigns and give clients a clear view of their progress.
You can use AdClicks to automate report generation and delivery to save time and focus on other tasks.
By following these tips, you can create PPC ROI reports that are informative, actionable, and engaging. This will help you to build trust with your clients and position yourself as a trusted advisor.
While knowing how to calculate PPC formulas is important, it is even more important to understand why they work the way they do. This will allow you to apply them in different situations, regardless of the accounts you manage.
It will also help you to become a true partner to your clients, as you will be able to explain how PPC works and how it can help them to achieve their business goals.
To measure PPC ROI accurately and optimize campaigns efficiently, use an all-in-one PPC reporting tool like AdClicks. This tool helps you to:
- Create visually appealing, white-labeled dashboards and reports
- Track progress in real-time and make necessary adjustments quickly
- Improve data transparency with clients
- Automate data retrieval from multiple marketing platforms
Avoid wasting time on manual reporting tasks, and invest in a tool that can help you streamline your workflow and improve ROI for your clients.
Try AdClicks for free for 30 days to see how it can help you reach your business goals.