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<\/a>clicked (click thru rate) and converted (customer takes an action such as submits a contact form).\u00a0 If someone searches for a Gazebo and your PPC ad appears; the searcher first sees the ad, then clicks on the ad, then takes an action to request a price on a Gazebo.<\/p>\nGoogle reports all that information but they do not know if the Gazebo was sold.\u00a0 That is incredibly important information to be missing when making advertising decisions.\u00a0 Without knowing the sale was made and how much was generated it is very hard to know for sure if your Adwords spend is profitable and would be almost impossible to know what the ROI on that spend was.\u00a0 In addition you do not know which ads are generating a positive return and which ads are not.<\/p>\n
It is very beneficial to know the ROI of every advertising campaign that you do in order to make smart marketing decisions.<\/strong><\/p>\n Hopefully we now agree that calculating the ROI of each PPC campaign is extremely important.\u00a0 Big business are already tracking this data, my goal is to illustrate how smaller businesses and entrepreneurs can accomplish the same.<\/p>\n Step 1 \u2013 The URL<\/strong> My suggestion is to have a different variable value for each different PPC ad that you have. To keep this a illustration more easily understood, \u00a0we will just use one variable name and one variable value in this example.\u00a0 By having just one variable value, we will be tracking your entire campaign, not separated by different ads.\u00a0 Here is an example of what your URL should look like: www.YourWebsite.com?google=1.<\/p>\n The variable Google can be any descriptive word that you choose. You can name this variable Adwords, Yahoo, Bing or whatever works best for you.\u00a0 I personally prefer using Google as the variable name when I am measuring an Adwords campaign.<\/p>\n Step 2 \u2013 Extracting the Variables<\/strong> Step 3 \u2013 Creating a Session<\/strong> Step 4 \u2013 Recording the Data<\/strong> That information being filled out in the form needs to be inserted into a database. Along with the personal information submitted you need to also submit the Cookie data into the database in the same row as the personal information.<\/p>\n Do not forget to include the date in which the form was submitted, this is extremely important. At this point the application will know that a specific person took the call to action on a specific date and that person came from a Google Adword with the number one indicating which Adword this user clicked. This can be referred to as a lead from that Adword campaign within a specific time frame.<\/p>\n Step 5 \u2013 Recording the Sale Now Person A purchases a shed for $2,000 offline.\u00a0 You need to record in the database that person A spent $2,000.\u00a0 If person A later purchases another item such as an Outdoor Table for $500, then this has to be added to the original $2,000 spend. Person A is worth $2,500 and came from Google Adword campaign 1 during the month of April 2010.<\/p>\n Step 6 \u2013 Recording your PPC Expenditures Step 7 –\u00a0\u00a0 Generating your ROI Report<\/strong> Step 8 \u2013 Make Smart PPC Advertising Decisions<\/strong> For example 50% of a sale can be profit and 50% goes to expenses. So in this case out of the $50,000 revenue generated only $25,000 was profit, then you subtract the PPC investment of $10,000 to come up with a total profit of $15,000.<\/p>\n With a positive return you know that the ad performed well and that you may want to increase your budget to maximize your return. Let\u2019s say in June you increase your Adwords spend to $20,000 and you generate $60,000 in revenue off that spend.\u00a0 Now you take the $60,000 in revenues and cut it in half to get $30,000 in profit, and then subtract the $20,000 PPC spend to get a ROI of $10,000.<\/p>\n This data tells you that you were more profitable investing $10,000 than investing $20,000 towards your PPC campaign.\u00a0 You should not entirely make your PPC advertising decisions off this data, but this data would be an important part of that decision making process.<\/p>\n A better ad or a better offer could have generated more revenue. With a better ad, possibly the $20,000 spend could have generated $80,000 in revenue which would have given you a total profit of $20,000 (80K revenue \u2013 40K in expenses \u2013 20K in PPC expenditure = 20K in profit).<\/p>\n – Jason<\/em><\/p>\n
\nEvery URL has the ability to store what is referred to as variables.\u00a0 In a URL, variables are set after a question mark (?).\u00a0 Here is an example; www.company.com?variablename=variablevalue.\u00a0 What you need to do is set up the variables that your Website will read from the URL when a searcher clicks your PPC ad.<\/p>\n
\nWhen a searcher clicks on your new ad the URL that will be live at your website will be www.YourCompany.com?google=1.\u00a0 You need to read that URL and extract the variables from it. I use the Cold Fusion programming language to accomplish this, but you can also use PHP, .NET, ASP or any other dynamic language.<\/p>\n
\nThere are different ways you can create a session for that user.\u00a0 The easiest way is to set a Cookie which will create a session for that specific user.\u00a0 This Cookie will follow that user throughout the Website as he\/she surfs from page to page. Basically what the Cookie is storing is that this specific user came from a Google ad (variable name) and from the first ad your tracking (variable value).<\/p>\n
\nAlmost every Website that is using PPC advertising should have a call to action.\u00a0 Some type of action you want the user to take, such as filling out a contact form, requesting a price, downloading a white paper, purchasing a product or service, etc.\u00a0 Every action should include the user filling in some type of information, with their name and email address being the minimum.<\/p>\n
\n<\/strong>As an example;\u00a0 Person A come to your Website from Google Adword campaign 1. Person A then requests a price on a \u201cShed\u201d that they were interested on your Website by filling out and submitting a \u201crequest for price\u201d call to action. Person A should then be recorded in your database. In this case, Google will be recorded and campaign 1 along with their name, email address and date submitted.<\/p>\n
\n<\/strong>In a <\/strong>separate database table you need to record the Google Adwords expenditure for each month that you want to run a report on. I run my PPC campaigns monthly with a specific monthly budget.\u00a0 Let\u2019s use April 2010 and an expenditure of $10,000 as an example.\u00a0 You need to record in the database that you invested 5,000 between 4\/1\/2010 and 4\/30\/2010 for campaign one.<\/p>\n
\nYour database has two tables; one that contains your PPC expenditure within a monthly time frame and another table that holds the sales data. \u00a0To report on the ROI for the month of April 2010 you need to run a query that pulls the spend from Google Adword campaign 1 during April \u00a02010 (table 1) and a query that adds how much revenue was generated from Google Adword campaign 1 from leads during the month of April 2010 (table 2).\u00a0 It is important to note that it doesn\u2019t matter when the sale was made; instead we focus on the date in which the lead was generated.<\/p>\n
\nYou are now armed with critical data to help you decide where to spend your advertising dollar. Let\u2019s use the following report as an example; April 2010 spend was $10,000 and the website generated $50,000 in revenue from that April 2010 spend.\u00a0 Your return on that investment was $40,000 or 400%.\u00a0 I personally like to focus on the dollar amount and not the percentage in this measurement. Obviously the $40,000 was not all profit, you need to estimate how much of revenue is actual profit.<\/p>\n