Getting Your Pay-per-Click Return on Investment
To know whether or not
your pay-per-click (PPC) campaign has paid off, you need to do a
little math. There are four formulas for computing PPC return on
investment (ROI).
Return on Ad
Spending (ROAS)
Ad spending refers to
the cost of marketing your goods or services. To get your ROAS…
ROAS = (Revenue –
Cost) x 100%
However, this formula
is too simplified; getting the amount of revenue and ad spending
requires separate formulas. ROAS can also be computed via the
percentage change formula.
ROAS = [(Revenue –
Cost) / Cost] x 100%
Return on Investment
(ROI)
ROI encompasses a
broader aspect of ad spending, including production and logistics
costs, not just the PPC costs. ROI can be computed using the second
method of computing for ROAS but by replacing cost of campaign with
the amount of investment.
ROI = [(Revenue –
Investment) / Investment] x 100%
Due to the scope of
ROI, this is a more realistic gauge from a business perspective.
Profit per
Impression (PPI)
An impression refers to
the number of times a visitor viewed the page once. It's not the same
as the number of unique visitors since ads can be randomly generated.
You can get impression data from analytics tools.
PPI = [(Revenue –
Cost) / Impressions] x 100%
Profit per Click
(PrPC)
PrPC can be computed
the same way as PPI but with impressions replaced by clicks.
PrPC = [(Revenue –
Cost) / Clicks] x 100%
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