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Put Your Money Where the Clicks Are. How to Measure Your PPC Campaign’s ROI  

Put Your Money Where the Clicks Are. How to Measure Your PPC Campaign’s ROI  

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How do you know if your marketing campaign has done well? What values should you measure your success against? ROI, or Return on Investment, is a crucial metric for determining the success of marketing campaigns, and we’re going to delve into the essential aspects of measuring this within paid advertising. Read on to find out how you can unlock the insights that will allow you to optimise your marketing strategies and maximise the value of every. single. click. 

We’ve looked at 3 levels of marketing attribution, from basic to advanced, so you can work out how much your campaigns are really working. 

Basic – Overall Revenue 

You’ve spent time putting together a marketing campaign and running ads to promote your product or business, but how much of your effort has driven value?  

At its most basic level, if you want to find out the returns from your ad campaign, you could do something like: 

Total Business Revenue / Total Marketing Spend = ROI 

For example, if our business makes £10,000 per month and we spend £1000 on advertising across all channels, then our ROI is 10. 

While this may seem basic, it can provide some simple but key insights into your marketing effectiveness. For one, this basic measure means you don’t have to worry about attribution, cookie policies, and iOS updates. It’s a raw number that tells you if your marketing has an effect. 

It’s also really simple to gather the information. You don’t need any direct tracking or coding experience, and it helps you look at returns from both websites and physical locations at the same time. 

The downside of this is that you don’t know what channel is providing the revenue. What if you’re wasting money on Meta ads when a flyer campaign is the true source of revenue? Or what if you would have gotten that revenue anyway through organic traffic to your website? 

Intermediate – Campaign-Specific Tracking 

The best way to deal with the potential issues with the above method is to set up tracking across your website or business to try and work out what is providing the real value. Google Analytics 4 is the best free system for this online, letting you know exactly how people got to your website and what they did when they got there. 

The math here is much the same: 

Campaign Attributed Revenue / Campaign Spend = Campaign ROI 

You can also use channel-specific tracking methods to look at your platforms or campaigns in isolation. 

For example, when running Google Ads, set up the online tracking to allow you to see how many people purchased, signed up, or called off the back of one of your adverts. In Google Ads specifically, your ROI is known as ROAS, or Return on Ad Spend, and is available as a column. 

Likewise, when running a Meta shopping campaign, utilise the Meta Pixel to find out the direct return from these ads. 

Ads Tracking for Lead Generation 

While the above method is easy for eCommerce, there is an extra level of difficulty if you are a business that focuses more on leads. In these cases, it is key to track the activity after the lead in a CRM system like HubSpot so you can track not only the number of leads a campaign brought in but how many of these converted to sales and then the value of these sales. 

For a rough estimate, you can take your confirmed sales and divide this by the number of leads. E.g., 15 leads, turned into 10 sales. From this, we can estimate that 66% of our leads turn into sales. 

We can then take our total sales value and divide by the number of sales to work out our Average Order Value. So, a lead generation estimated ROI may look like: 

(Leads x Conversion Rate x Average Order Value) / Advertising Spend = ROI. 

For an even more accurate number, you can feed data from CRMs back into your ad platform to see the true ROI. In the case of Google Ads, you can do this through “offline conversions”. 

Having such a rich bank of information like this allows you to understand which marketing campaigns have performed well and have driven the most revenue. 

While these methods provide us with an increased level of reporting, they do not look at total ROI, e.g., profitability after costs. This is the real key to working out the true value of your marketing for your business. As the saying goes, revenue is vanity, and profit is sanity. 

Advanced – Profitability ROI 

Profitability from running a successful marketing campaign can be worked out when you’ve deducted the costs of running the campaign, along with the cost of sales, from the amount of money that you make. 

Using this method to find out ROI helps work out not only the sales from your marketing but also the real profitability. There is no point in bringing in revenue if we have sold the product at a loss. 

Using the channel-specific data from above, we can then work out the profitability by channel too. 

A straightforward way of showing this is: 

(Attributed Revenue – Cost of Sale) / Advertising Costs = Profitability ROI 

An additional consideration to the calculation above could be Lifetime Value. This can be added to work out the value to your business of bringing in a new customer. For example, if you are a boiler engineer, as well as including the sale from the first visit, you could also include the subsequent yearly servicing. 

Beyond the Blog 

While the methods all have their pros and cons, the key thing they are missing is the value of non-sales-related marketing. For example, a brand-focused TV campaign does not give you channel-level sales in the way that an online campaign does.  

How to measure the value of brand campaigns will be coming soon, so you can take a deeper look at attributing ROI to this style of marketing, which is key to the long-term growth of your business. 

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