Your PPC Campaigns Are Driving Conversions, But Are They Driving A Profit?

When investing time and money into pay-per-click campaigns, it is important to not only focus on the number of visits or conversions but more so the revenue and profit it generates. One way to do this is to work out the value of a ‘lead’ – this can be a nominal value based on your internal data – and then work out how many conversions (i.e. form completions, phone calls etc.) lead to a converted ‘lead’. For example, if you had 10 conversions and two became clients, you know that you have an internal conversion rate of 20%. From this, you can then track the return on investment (ROI) more accurately and are able to scale your campaigns in line with this. ROI is a common business metric but it’s always amazing to see how few companies, especially B2B companies, have an ROI model to help track the value that their Google AdWords campaigns. Or the value of any of their marketing for that matter. It is more beneficial to have a basic and simple measurement than to have none at all. Whilst you can have a vague guess of what is working when times are good, in the long term this isn’t going to be sustainable and will lead to lost opportunities down the line.

Conversion tracking is crucial

To help measure your AdWords ROI you will need to track events and conversions. These are actions that you want your customers to take after clicking on your ads, such as making a purchase or completing a contact form. To measure these accurately you will need to add conversion tracking – this can be done in Google AdWords, Google Analytics or you can import them from third-party software. In simple terms, return on investment is how much revenue you have made from your ads compared to how much you have spent on them. To get your ROI percentage you take the revenue that resulted from your ads, subtract the advertising costs, then divide by your advertising costs and multiply by 100. For example, let’s compare the following AdWords campaigns:
Campaign X Campaign Y
Total Spend £1,000 £250
Clicks 5000 1000
Conversions 50 25
Conversion rate 0.01 0.025
Revenue £1,500 £750
ROI 50% 200%
As you can see, although Campaign X appears to have performed better based on the fact it generated more clicks, conversions, and revenue, Campaign Y was actually more efficient with an ROI of 200%. While both campaigns were profitable it would be better to invest more in Campaign Y next time.

Things aren’t always what they seem

What is important to learn from this, is the statistics within your PPC campaigns aren’t always the full picture. By having knowledge of your internal conversion rate, you can better strategise and budget for future campaigns. For more information on conversion tracking, or for AdWords support from the experts at AdPilot, get in touch with us today.