Quantify, Qualify, Conquer: A Guide to Validating and Understanding PPC ROI

PPC has long been established as a great option to increase brand visibility, conversions and eventually, leads. However, running a truly effective campaign often takes more than just adding your budget; it should tie back to your business’s goals in a way that makes sense. In this article, we’ll show you how to go deeper to get quality campaign performance insights and (hopefully) enjoy an uptick in sales/conversions for Q1 of 2024.

The Bottom-Line: Understanding ROI vs. ROAS in Marketing Metrics

Even though these two important terms are often (mistakenly) used interchangeably, they are different from one another. ROI measures the resulting profit generated from ads relative to overall cost to implement them. This term properly assesses how profitable your campaign is, and its all-important effect on your bottom line. Here is the proper formula to calculate ROI: 

PPC ROI – ((Total PPC Revenue – Total PPC Expenses)/ Total PPC Expenses) X 100

One simply calculates PPC ROI by dividing net profits by expenses. PPC-related costs can include subscription fees and labor costs, along with the cost of hiring a competent freelancer.

PPC ROAS focuses on the revenue generated from advertising campaigns or associated components. This is the metric that measures exactly how much money is made for every dollar spent on your PPC marketing campaign. Following is a formula for calculating this efficiently:

ROAS – (Revenue Generated from Ads) / (Cost of Ads)

Tracking PPC return on ad spend can uncover very useful platform-specific insights, like whether one platform is more effective for your ad campaign than another. It therefore makes it easier to decide whether or not you need to keep things the same or reallocate PPC budget to net better results.

Money Talks, But How? Exploring the Challenges of PPC ROI in Marketing

While it’s normal to want to see a paid campaign directly contribute to your bottom line, the truth is that a PPC campaign’s return on investment might not just be money. There might be several conversion goals involved with the campaign, and it could be challenging to assign an exact dollar amount to certain goals. Monitoring historical results and real-time marketing metrics helps greatly in this scenario. That’s why Farfetched Studios provides detailed reporting that can help identify trends, specific marketing insights and help give a full, more accurate picture of the PPC ROI.

There may be instances where the PPC marketing campaign is starting to gain positive momentum but is not quite converting yet. As your brand’s reach grows stronger, it’s important to understand exactly how this will translate to leads at a later date. Keep in mind that there isn’t a way to quantify every effort that goes into an effective PPC campaign – there is a lot of behind the scenes work and strategy required of your marketing team!

Bidding Brilliance: Positioning Yourself for ROI Success

To successfully achieve a conversion goal, it is best to thoroughly define them beforehand. Taking a close look at what is needed to grow will aid in defining meaningful metrics. Close rate, overall website traffic hits, and conversion are all necessary to paint a complete picture. Enabling conversion tracking provides some excellent firsthand insights into how your efforts are creating results. 

It is possible to create conversion actions on the platform of your choice that directly align with your goals, giving you a concrete framework to look at when the daily data gets tough to discern. Tracking codes such as Google tags are an excellent tool and enable your team to frequently gauge your progress. UTM tracking parameters allow you to see which keywords lead to apex, making redefining your strategy over time an easier task.

Conversion Chronicles: Setting KPI’s for Stellar Performance: 

We’re all hoping to be the bearer of GOOD news when it comes to delivering a campaign’s analytics. First thing’s first – it’s important to decide which key performance indicators will be measured and monitored. This is when it’s necessary to determine the best metrics to represent your progress. Here are some of the most common metrics used for PPC strategy:

  • Click-through rate (CTR): how many users have followed through and clicked on ads after viewing
  • Conversion rate: how often a user “completes the process” that leads to a signup, profit, or appt.
  • Return on ad spend (ROAS): the financial amount generated for each dollar that was spent on a campaign
  • Quality Score: Google’s tally of your ads and relevance, which directly influences all-important ad ranking.
  • Revenue per click: the amount of income gained after each click on a pay-per-click ad

Confidently Showcasing PPC ROI in Reporting:

We always strive to make sure that our clients can see the value of our services. The team here at FarFetched Studios is eager to provide insight into future bidding, trends that affect algorithms, and strategies to gain more profit and valuable exposure. Budget management, keyword and ad performance monitoring, and custom-built strategies will allow you to effectively turn leads into conversions. 

Are you thinking of taking things to the next level with your business? You may have planted the beginning seeds for these ideas + more:

  • Drop-shipping 
  • The automotive industry
  • Pet care provisions 
  • Managing an online store
  • Creating a dating app
  • Becoming a consultant
  • Owning a sporting goods store
  • A new healthcare venture

Now is the time to be seen frequently by potential customers, and expand your reach. Don’t navigate the first quarter of a challenging year without an expert’s touch: contact us today to declare PPC victory for your entire campaign!

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