How to Improve Your ROI (Return On Investment)
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 ROI Is and Why It’s Important
Simply put, 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 acurately. Think about all your costs. PPC is a cost. The tracking softwares you use, 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 not-so-easy part. Some clients come back several times with no added cost and buy a lot. Others buy just once, in small amounts, and never come back.
You need to be well organized, to use some 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 you can distinguish the winners from losers?
In a perfect world you’d be the one to check the performance of every keyword, ad, landing page, and have plenty of time left to enjoy life. One of the most common pitfalls in calculating ROI is when you do things “a la carte” for a while… and then, as you include more keywords, ad groups, ads, campaigns, products to sell and so on, forget about it. By the time you come to manage more campaigns with hundreds of keywords each, you won’t be able to keep track easily.
You need some tools.
Start with what AdWords offers you — their reports are quite comprehensive. Take advantage of their free ROI tracking tool.
However, the AdWords tracking tool has many limitations – the most important is that it works only with AdWords traffic. So, if you also get traffic from other sources, you may want to check some alternatives. Here’s a list Perry Marshall recommends:
- Link Counter.com
- HyperTracker.com (we use this one)
- AdMinder.com
No matter the software you use, you have to feed it sufficient and accurate data. And, most important, you have to do that ceaselessly.
How to Improve ROI
You’ll increase ROI when you improve these key-factors:
- Conversion ratesConversion rate can be increased by the quality of your landing page, and the ads, which act as client-triggers.
When your visitors want to give up on reading your landing page, hang another link to their eye, or do something to remind them they need you. Read the next article, about how to sell more to the same traffic.
- Traffic qualityYour keywords may be too general. In this case, they bring a lot of traffic, but not too many conversions. The traffic is not well targeted, and, as a consequence, your ad is badly distributed.
Moreover, you may be spending too little on the keywords you believe to be unperformant. If you set up your daily budget much too low, Google won’t display your ads to all the searches, but only at a fraction of them, untill you complete your daily spent (learn more about this in Perry Marshall’s free email course).
Also read Andrew Goodman’s 21 Ways to Maximise ROI — a great collection of killer AdWords strategies.
- Traffic costsYou can cut the advertising costs by increasing your CTR and eliminating unproductive keywords.
