How to Improve Your ROI (Return On Investment)

Get the Flash Player to see this Google AdWords tutorial about building your keyword list.

After all the work done with Google AdWords, you need to know how much you gain in the end. Is it worth it?

This article will help you understand the key-factors that influence your return on investment (ROI), and how you can fine-tune them to increase it.

What Is ROI and Why Is It Important

Return on investment (ROI) is a percent that expresses how much money you gain for the money you spend. Or, in other words, how many times you gain back the money you spend. This percent shows whether investing in a business is worth the effort or not.

The common formula to calculate ROI

ROI = (revenue - costs) / (costs) * 100

In order to have the exact image of your campaign’s efficiency, you need to calculate the costs and revenues accurately. Think about all your costs. PPC is a cost. The internet bills and other payments are costs, too. Your time is a cost. You need to include them all in your calculations.

Calculating revenue is another difficult part.

You need to be well organized, use reliable tools, and never lose control.

Tracking Your ROI

Each keyword you use in your campaign contributes more or less to the overall ROI. Some keywords are by far better performing than the others. How do you distinguish the winners from losers?

It’s difficult to keep track of the performance of every keyword, ad, landing page etc. One of the most common pitfalls in calculating ROI is when you do things bit by bit for a while and then, as you include more keywords, ad groups, ads, campaigns, products to sell and so on, start to forget about keeping track.

By the time you go back to try start calculating your ROI again, you could be managing many more campaigns with hundreds of keywords and find it impossible to keep track of everything alone.

You need some tools.

Start with what AdWords offers you — their reports are quite comprehensive. Take advantage of their free conversion tracking tool, which will allow you to determine your ROI. Read our article “How To Track Your Results” for an overview of AdWords conversion tracking.

Remember, don’t just focus on AdWords traffic alone, combine AdWords tracking tools with Google Analytics to get the best overview of your website performance.

How to Improve ROI

You’ll increase ROI when you improve these key-factors:

Conversion rates

Conversion rate can be increased by the quality of your landing page, and the ads, which act as client-triggers. Providing useful and relevant content on your website will ensure potential customers stay on your website rather than leaving as soon as they’ve finished reading the information on the landing page, keep the user interested and around long enough to persuade them to make a purchase.

Traffic quality

Don’t make your keywords too general. Broad keywords can bring a lot more traffic, but not many conversions. This type of traffic is not well targeted and as a consequence your ad can be badly distributed.

Check that your under performing keywords aren’t simply restricted by their budget. If your daily budget is set too low then your ads will not be eligible to display for all searches related to that keyword, as the daily budget could be getting eaten up too soon. Don’t miss out on these clicks, increase the budget and see if this has any effect.

Traffic costs

You can cut the advertising costs by increasing your CTR and eliminating unproductive keywords.

Remember, you can watch this and other AdWords Tutorials on our Youtube channel too.

Further Reading: We recommend reading How To Build Landing Pages That Work next, or check out some of our other tutorials below.

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