We are often asked ‘how do I calculate Return on Investment(ROI) on a Pay Per Click(PPC) campaign?’ Or ‘how do I calculate whether I should invest in a PPC campaign or services?’

Assuming you know some statistics about your site, I will explain using the following example:

Lets say your budget affords you to be able to allocate $2000. per month to Pay Per Click advertising. After bidding, your average cost per click is 35 cents. Assume you generated enough clicks to use your entire budget. $2000 divided by 35 cents is 5714 clicks to your site.

Historically 5% of your site visitors converts to a sales lead (sale, lead generation, goal attainment, etc..). 5% of 5714 is 286 sales leads generated. You also know from your own historical data that your average sale is $72.00. 286 sales at $32.00 each is $9152.00 in sales generated by your PPC campaign that month, minus the $2000. initial investment and you have a Return On Investment of $7152. for the month.

In general, most PPC Services will give you an even higher ROI because we focus on your campaign while you do what you need to do – run your business. Lets say that instead of a 5% conversion rate, the PPC Service generates 8.5% conversion. Starting with the same 5714 clicks, 8.5% is 486 conversions @ $32.00 avg sale equalling $15552 in PPC sales for the month or a ROI of $13552. That is an additional $6400. by using the PPC Service.

There are plenty of companies out there that will try to charge you that kind of money for this service, but reputable ones do not on that size of an initial budget.

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© 2009-2010 Advantage Ecommerce Solutions Web Strategy Blog | How To Calculate ROI On A Pay Per Click Campaign

Pay Per Click advertising is a Search Engine Marketing Strategy that requires that you pay a fee every time someone clicks on your ad taking them to your site. The fee is the amount that you pre-bid on how much you are willing to pay per click based on a selected keyword or keyword string vs. the other bidders. Your bid affects placement of your ad in relation to the other bids. You only pay each time someone actually clicks the ad and visits your site.

Optimally, the ultimate goal with any PPC campaign is conversions. Conversions are the amount of click-throughs that are converted into your goal, normally making a sale or receiving a lead etc…. Since 80% of all searches online are done on search engines, the more exposure that you receive on search engines, both naturally and paid, the more traffic you should receive. Search engine placement naturally for any given term where you want the listing to appear can both take a lot of your efforts and take a long time to achieve. PPC cuts the time to time invested setting it up and monitoring the bids. Hence, producing traffic and conversions much faster.

The key objectives of any PPC campaign are to maximize impressions, clicks and conversions once they are on your site while minimizing cost per conversion.

Four ‘Best Practices’ to enhance to any PPC campaigns success are:

Keyword Research and Targeting – prior to launching any campaign you must research your keywords and phrases. It is also to your advantage to analyze what keywords your competition is targeting. Target the ‘long-tail’ phrases. For example, bidding on the term ‘ergonomic keyboard’ is going to be both expensive and very competitive. The person searching for an ‘ergonomic keyboard’ may or may not be just beginning their search. Bidding on the term ‘ergonomic keyboard with touch pad’ will cost less, have less competitors bidding on the same phrase and the person searching for an ‘ergonomic keyboard with touch pad’ has most likely already narrowed down their search and be closer if not at the final decision stage of their searching.

Creative Ad Copy – research PPC ad copy strategy. There are plenty of tools available like Keyword Spy, Link Diagnosis, Wordtraker and others that will help you analyze the current ads including performance stats. From this information, you should be able to formulate a reasonably successful, creative Ad.

Bid Management – If you cannot manage your bids daily, most people cannot, hire a service like ours or if necessary, use a 3rd party bid management tool. The 3rd party tool is much better than not monitoring it at all, but using a service usually more than pays for itself just in bid savings. Why pay 75 cents for even 1 click when the next highest bidder just dropped his bid to 25 cents?

Tracking, Reporting and ROI Analysis – Without feedback, you cannot improve. The amount of data that can be retrieved and analyzed from a PPC campaign can be mountainous. Look specifically a keyword performance, specific Ad copy performance, conversion rate and of course, ROI.

In conclusion, the money that you spend mounting a PPC campaign and specifically utilizing a PPC service such as the service offered by AES through our site will far out weigh the loss in sales that you are experiencing and your competitors are reaping by not having a PPC campaign and letting then reap the rewards.

Look for our next post titled ‘How To Calculate ROI On A Pay Per Click Campaign’. Please leave comments, we welcome your thoughts and ideas.

© 2009-2010 Advantage Ecommerce Solutions Web Strategy Blog | Elements of Successful Pay Per Click Advertising

I hear these two words mis-stated on a regular basis. It seems to me that people don’t quite understand the difference so I thought I would clarify it with a blog post. They are very similar, but e-commerce is a function of e-Business and thats where the clarification is needed.

E-business is defined as “A business that operates partially or primarily over the Internet, usually providing services to other businesses.” by wictionary.org. E-commerce is described as “commercial activity conducted over the internet”.

Any business cnducted via the web or over the web would then become e-Business. e-Commerce is a function or a feature of e-Business. All e-Business is not e-Commerce. For example. Jim Bob owns a plumbing store/company and has a static/brochure website built to maintain a web presence, add himself to local search, and make his services searchable and findable for online users. He sells nothing over the internet. His static/brochure website is conducting e-Business by acting as an advertising platform and virtual storefront for his business.

Jenny Sue owns a custom Teddy Bear Store on the internet. You go to her site, pick and order your bear, it is made, shipped and delivered to you. She has no brick and mortar storefront. Jenny is conducting e-Commerce over the internet through her commercial activity. He e-Commerce site is an e-Business as it performs and operates a business or business acitvities on the web.

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© 2009-2010 Advantage Ecommerce Solutions Web Strategy Blog | E-Business vs. E-commerce