How much profit you’ve made from your ads and product listings compared to how much you’ve spent on them.
How ROI Works
ROI is the ratio of your net profit to your costs. It’s typically the most important measurement for an advertiser because it’s based on your specific advertising goals and shows the real effect your advertising efforts have on your business. The exact method you use to calculate ROI depends upon the goals of your campaign.
To calculate ROI, take the revenue that resulted from your ads and listings, subtract your overall costs, then divide by your overall costs: ROI = (Revenue – Cost of goods sold) / Cost of goods sold.
Example
Let’s say you have a product that costs $100 to produce and sells for $200. You sell 6 of these products as a result of advertising them on Google Ads. Your total sales are $1200, and your Google Ads costs are $200. Your ROI is ($1200-($600+$200))/($600+$200), or 50%.
To help measure your Google Ads ROI, you’ll need to track conversions, actions that you want your customers to take on your website after clicking your ad such as a purchase, sign-up, or download. A conversion is when a customer clicks your ad and takes a specific action that you deem valuable, such as purchasing your product, filling out a contact form, or making a phone call. Conversion tracking measures these events. We use conversion tracking, Google Analytics, and other in-house tools to help you track conversions in your account.
ROI is typically the most important measurement because it shows the real effect that Google Ads has on your business. While it’s helpful to know the number of clicks and impressions you get, it’s even better to know how your ads and listings are contributing to the success of your business.
Why ROI matters
By calculating your ROI, you can find out how much money you’ve made by advertising with Google Ads. You can also use ROI to help you decide how to spend your budget. For example, if you find that a certain campaign is generating a higher ROI than others, you can apply more of your budget to the successful campaign and less money to campaigns that aren’t performing well. You can also use ROI data to try to improve the performance of the less successful campaigns.
Our Clients Enjoy Signifficant Growth and ROI
Overtop Media clients enjoy 19% to 421% Year over Year Growth. Call today to learn how we can help your business grow and expand.
