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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