PPC is a very effective marketing technique. It is very important that you understand your PPC data to make the most of the technique. There are certain ways that you can track the success of the PPC data and understand it fully.
In this article, we will explore two relevant formulas that are very important in understanding your PPC data. Let’s dive in!
What Is PPC?
PPC stands for pay per click. This is a way of advertising that works on a click basis. Advertisers will display advertisements on Google Ads, and every time these adverts are clicked on, they will pay a fee.
PPC is used by businesses to encourage traffic to their site and increase sales. These ads are directed towards their target audience.
Most people look for products that they desire through search engines, so this is a very key way to make the most of an opportunity and make a sale on their site. It can put you ahead of the competition.
Cost Per Click Formula
The cost per click formula is one of the key formulas that you will need when you are taking part in a PPC campaign.
This formula will help you to figure out how much each click costs.
The formula for this is: total cost / number of clicks.
For instance, you would work out from this how much you are paying for the cost.
The cost per thousand impressions is also a related formula. It is similar to the PPC calculation, but it deals in terms of a thousand clicks rather than each one.
The reason for this calculation is that you can see how many people are seeing your advert and the cost of this. This will let you know the costs of increasing your visibility. In order to work this out, there is a formula.
The formula to work out the cost per thousand clicks is: (total cost/ number of clicks) x 1000
The click through rate is another formula that is related to the cost per click formula. This lets you see how many people will actually click on the advert when compared with how many people will see it.
The formula for this is: (number of clicks/number of impressions) x100.
This is an important formula because it lets you know how effective your advert is. For instance, if your click through rate is quite low then it will highlight to you that you should change the advert in order to improve the performance.
Return On Investment Formula
This is another very important formula when it comes to understanding your PPC data. You should be able to work out the CPC and CPM, however, you should also be able to work out the ROI.
The return on investment is very important because it doesn’t just focus on the costs of your campaign, but it focuses too on what you are achieving from it.
You will get tangible numbers on the success of the campaign through ROI calculations.
You will also have the opportunity to compare ROI information on different advertising efforts to accurately see what campaigns you are performing well on, and which direction to go in the future.
You can see which campaigns are performing well and which are bringing in sales for your business.
The formula to calculate the ROI is: (revenue generated – cost of campaign) / cost of campaign) x 100.
It can be quite difficult to calculate the ROI because it can be difficult to trace a sale back to the campaign.
This is because sometimes someone will click on your ad and surf your site and then return later to make the purchase.
They may also head to your site because of the advert but then call through the order.
When you look at your analysis of this data, this will not show up as a result of the ad campaign – even though it actually was.
In this case, you can do some extra analysis which can help you to trace the sales back to the campaign. You can trace back the phone number to see if they are associated with the same person that was clicking on the advert.
ROI is a very important formula when you want to understand your PPC success. The conversion rate is another formula that is related to the ROI.
This shows the amount of conversions that occur due to a click through. Conversions can refer to sales or any action that you want your customers to engage in.
For example, someone singing up to a subscription will count as a conversion rate.
This formula calculates how many of these types of formulas are encouraged by the advertisement. This formula looks like this: (number of conversions/number of clicks) x100.
This is an important calculation when it comes to PPC. Due to this, it is highly recommended that you track all of the conversions that you are achieving.
You should attempt to track the conversions that come in through other means, not just online conversions, if you want the most accurate results.
Conversion tracking is very important when it comes to data because it will give you a much more detailed understanding of how successful your PPC campaigns are.
It highlights whether the PPC ads are encouraging people to buy rather than just to click through but not purchase anything.
If an ad campaign is bringing in lots of clicks but no conversions, this doesn’t make for a successful campaign.
If this is happening, you should revisit the advert in order to get the most from it. You might want to track the data to see at what stage the users are abandoning their cart to reassess the advertising.
You can also send out surveys by email to find out a little bit more about why they didn’t follow through on the purchase and complete the conversion.
Cost Per Acquisition
The cost per acquisition is another formula that is important when it comes to understanding your PPC data. This will let you know how much each conversion costs you.
This is very important to know. So far, we have looked at formulas that let you know how much you will pay per click, but this abandons the data there, never going further into detail into whether the clicks turned into anything.
You might have had 200 clicks but no sales, and this does not make for a successful campaign!
The formula for this is: PPC campaign cost/ number of conversions.
Again, it can be difficult to figure out which conversions were a result of the ad campaign, but you can do your best to get accurate data here.
Pros Of PPC
There are many pros and cons of PPC advertising. Some of the benefits include:
PPC adverts are put out there immediately. This makes them very effective in advertising things like events.
You will see immediate results to these adverts, whereas marketing techniques like SEO are much less immediate. You will have to wait longer to see results in this case.
PPC is a great technique for building brand awareness. You don’t even need people to click on the ads, they may just take a mental note of the ad to return to if they ever find themselves in need of your product.
This is great because it is free brand awareness.
No Money Wasted
If no one clicks on your advert it is not so bad as you won’t have to pay for the loss. It is not like you’ll have spent lots of money on a campaign that comes to nothing.
Cons Of PPC
PPC advertisements are very temporary and they will only be on the page for a very short time. They are a short term way to boost sales but they don’t work as a long term advertising campaign.
Some of the recorded clicks can be fraudulent or accidental. If this happens, you will have to pay anyway as this is very hard to track and prove.
PPC advertising is very competitive because there are often lots of adverts for similar products displayed next to yours.
You will need to make sure that your ad stands out so that users choose your site over your competitors. You won’t always come out on top in this case, so you may end up not getting a lot of traffic from the PPC.
The two essential formulas for helping you to understand your PPC data and the success of the PPC campaign are the cost per click formula and the return on investment formula.
On the back of these, there are some other formulas that will help you go into more detail about where the ad campaign is succeeding and where it needs more work.
With this knowledge, you should be well on your way to making the most of your PPC campaign.