Instructions for and things you should know before using the ROI Calculator.
PPC Advertising ROI Calculator Instructions
The PPC ROI Calculator is not difficult to use but you do need to know a few things before you can succesfully utilize it. You can use the calcualtor for estimating ROI on entire campaigns, adgroups, or keywords. If using to calculate Keyword ROI then the values that you apply must be for the single keyword only.
Variables that you need to enter into the PPC ROI calculator:
Email Address (optional): If you would like to submit the completed ROI form when you are finished we will perform a free analysis of your findings to help you determine if there is room for improvement or errors in your assumptions. The most common errors are related to Impression share and conversion rate. You do not need to enter your email address and if you do not press the free analysis button the information you enter is not saved or sent to anyone.
Average number of seraches: To begin you should know the average number of searches that a given campaign, adgroup or keyword will recieve. If you do not know this number then the calculation of the Click through rate will not be accurate.
Google Predicted Clicks: When setting up a Google Adwords campaign, Google will initiall predict how many clicks you should expect to get for each keyword selected. Insert that number here. The estimate by Google is typically high. This is due to the fact that their initial estimate is based off 100% impression share.
Expected Impression Share: (VERY IMPORTANT) Google will apply an impression share rating to every campaign. This is based on ad, keyword, and landing page quality. After a campaign has run for some time this score will be affected by your domain’s click through Rate (CTR) over time. If you are unsure what to put here you really should ask for some advice. 100% Impression share assumes that your quality scores are high enough to qualify for all the clicks that are avaialble. Novices should use a value of 50%, PPC experts can expect 80% or higher impression share scores.
Max Cost per Click: The most that you will pay for a click
Average Cost per Click: The Average you expect to pay for each click
Projected Conversion Rate: When a visitor comes to your site how often will they convert into a sale or lead. The number you enter here is a percentage. For example if 1 out of 100 visitors will turn into a sale then the percentage is 1% if 10 out of 100 visitors then 10% and so on. Conversion rate is affected by a large number of factors: Site design, price of your product(s), competitors prices, and more.
Daily Budget: This si the total amount you will spend per day. Note: if you have projected too many clicks your daily budget may be lower than your true cost. The calculator will warn you of this condition. If you recieve the warning you will need to adjust either your daily budget upward or the total number of clicks or costs downward.
Average Sale Amount: Note: This is a total sale amount, not individual product prices. Enter the average amount of a completed transaction for your site.
Your Average Profit per Sale: This amount reflects the total profit you make for each completed transaction on your site. For instance if your average sale is $100.00 and your average cost of goods is $35.00 then your average profit per sale is $65.00.
What the PPC Advertising Return on Investment (ROI) Calculator will show you:
Monthly PPC Budget: This is a calculation of your daily budget multiplied times 30
Google Predicted Click Through Rate: Based on the Google Predicted number of clicks and the average number of searches.
Actual Clicks per Day: After impression share is calculated what the total number of actual clicks per day is expected to be.
Conversions Per Day: Total Actual Clicks multiplied against the expected conversion rate
Total PPC Cost per day: Total Actual Clicks per day multiplied against the average cost per click.
Total PPC Cost Per Month: Total PPC Cost per day multiplied by 30. Obviously if your advertising isn’t going to run every day of the month this number would be different.
Total Monthly Sales: Total Conversions per day multiplied by 30. Oviously if your PPC advertising isn’t going to run every day of the month this number would be different.
Average Cost per Conversion: Total Cost per month divided by the total monthly sales.
Total Monthly Sales Dollars: Total Monthly Sales multiplied by Average Sale amount.
Total Monthly Product Cost: Total Monthly Sales multipled by Average Sale amount less the average profit per sale.
Gross Profit: Total Monthly Sales less the Total Monthly Product Cost
Total Net Profit (after PPC Costs) Gross profit less Total PPC Cost per Month
ROI Percentage Total Net profit divided by Total PPC Cost per month