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Find Your PPC ROI: How to Calculate Cost per Click

Find Your PPC ROI: How to Calculate Cost per Click

Every business that is spending $1 on Google Adwords will earn an average of $2 in revenue

Does that mean your business is destined to make a profit with Google Adwords? 

Not exactly. 

You want to get what you paid for. You want to earn revenue based on what you’re spending on Google Adwords, Facebook advertising, or another form of advertising that uses clicks to measure results.

But how do you do that? How do you measure the ROI of your AdWords and your cost per click?

You have to know how to calculate cost per click. You have to calculate the ROI. When you learn how to calculate the cost per click, you can start strategizing. 

You can figure out how to produce a higher ROI for your business. 

Here’s what you need to know in order to succeed with Google Adwords and how it can help your business exponentially growth.  

You’ll find a guide to understanding your AdWords ROI, PPC ROI, PPC formula, PPC calculator, and Google ROI.  

How to Calculate Cost Per Click

Cost per click can be calculated by taking advertising costs and dividing it by the number of clicks. The result will tell you how much you’re spending on advertising and essentially tell you what your revenue is. 

You may also want to know what the average cost per click is because it can give your business some insight into how much the average advertiser spends. 

The average cost per click formula is average CPC = total cost of clicks divided by the total number of clicks. 

You can figure out how much you’ll be charged with each click on Google Keyword Planner. 

Reasons Why Your CPC is High

If your business sees a high cost per click, resulting in more money being spent, it could be for a lot of reasons. 

It could be the competition is high in the keywords you’re using on Google Adwords, or your competition is running similar ads. 

It could also be your quality score depending on your use of keywords, ad relevance, and other factors. 

Why It Matters

This is why it’s valuable to understand how to calculate your CPC. It determines your ad spend and your overall profit as a business. You want to ensure the money you’re spending on Adwords on another form of advertising is giving you the best value. 

You have to figure out how much of a profit margin you’re willing to take based on your return of investment from Google Adwords or another form of advertisement.  

Why Pay Per Click is a Remarkable Strategy 

Knowing what’s a good cost per click for your industry gives you not only insight, but it also gives you the advantage over other competitive businesses. 

It gives you an advantage because you can look at specific metrics that can help you strategize and figure out how to target your market. It’s a strategy to understand why they click more or less.

You can zone in on this target audience and figure out what’s wrong with your ad if it’s the copy, the image, or something else that is not bringing in clicks. 

Measuring your cost per click gives you an opportunity to really know your target audience, which can give you more profit. 

You can also measure your spending goals and determine if you are getting the amount of traffic to your site to bring in more clicks. 

If a certain kind of advertising is not working for your business, you can assess if you want to continue with it. Cost per click is a measuring tool that works across various advertising platforms, so you’re not limited to using just one advertising platform. 

You can decide what’s going to bring your business the most profit from a specific advertising campaign with a profitable cost per click. 

What’s the ROI? 

While we mentioned the average ROI for a business, it’s insightful to take a deeper dive into the analytics and see what is producing the best investment for your business. 

Your Google ROI

To calculate your Google Adwords ROI, take the revenue from your ads, subtract your overall costs, then divide by your overall costs. The result will tell you your overall profit. 

However, you will also need to track your conversions. You may have clicked on your ad, but maybe some of them stop when they get to a certain point in your funnel. Conversions can help you take a deeper dive into what your ROI is. 

Your PPC ROI

Another helpful tool for determining your return on ad spend is taking the sales from PPC, subtract it from the cost of PPC, divided by PPC cost. 

To avoid any confusion, here’s an example. 

Let’s say the sales from PPC was $2000 and the amount of money you paid for PPC was $1000. We would subtract both numbers, which would be $1000, and then divide it by $1000, resulting in 1.0 = 100%. 

That is how you figure out your return on ad spend.  

How to Optimize Your Cost Per Click

Calculating your cost per click is just the beginning if you want to succeed and bring a profitable ROI. 

After you calculate cost per click and your ROI for any kind of advertising, you need to assess which is bringing you the most profit. You have to figure out if you need to test your offer more. Maybe it’s the copy, the image, or the placement of the ad that could be improved. 

That’s why you now have a measurable tool in assessing what is going wrong and right with your advertising. 

That’s how your business can succeed beyond your competitors.  

Now you have all the tools required for understanding your CPC ROI or Google Adwords ROI. You have the tools to succeed. 

If you need help, we can help you master these tools and do the work for you

You can see how we help businesses like yours and how we help them succeed beyond their expectations

PPC Management Pricing

PPC Management Pricing

PPC Management Pricing: Are You Paying Too Much?

 

A lot of people assume that if you’re paying a lot of money for a product or service, it’s going to be superior than low-cost options. However, that isn’t necessarily true. In this guide, we’re going to go over PPC management pricing and how to figure out if you’re paying too much.

 

A PPC Management Service is supposed to let you focus on what you do best – growing your business. But are you paying too much for peace of mind with little results?

This is a common, yet costly, issue for expanding businesses. In this article, you’ll learn why you’re losing money on PPC, how much you should be paying, and how to save money on your PPC strategy moving forward.

What Is PPC?

PPC stands for pay per click. PPC is the foundation for most of your favorite ad Networks, from AdWords to Facebook. Instead of paying for an entire PPC strategy at once, you pay only when someone engages with your ad. This is a huge draw for business owners, but if mismanaged, it’s like flushing money right down the drain.

Here are several reasons why PPC campaigns lose money:

  • Targeting the wrong audience
  • Competing for pricey keywords
  • They’re not optimized for mobile
  • Not tracking performance or results
  • Not implementing a PPC strategy
  • Depending on Broad match
  • Uninspired ad copy

In the hustle and bustle of running a business, it’s easy for details like these to fall through the cracks. These mistakes add up and they certainly don’t help your conversion rate.

That’s where your PPC Management Service comes in.

What Does a PPC Management Service Do?

PPC managers are responsible for managing pay-per-click accounts across all PPC ad Networks. But what does this mean for you, the business owner? What should you be getting for your money?

In addition to avoiding the aforementioned problems in the previous section, your PPC manager should be responsible for the following:

  • Strategic planning and implementation
  • Achieving a good return on investment (ROI)
  • Deliver PPC campaign reports
  • Quality copywriting
  • Market research
  • Campaign performance tracking
  • PPC budget management
  • Keyword Research
  • Setting conversion goals

Let’s cut to the chase. How much will this cost you?

Paying for PPC

How much you’ll pay for PPC management will depend on a number of factors, from your target audience to marketing needs.

For example, an audit may reveal that social ad networks yield more conversions for your business than Google AdWords. Understanding which channels work best for you will help you calculate how much you’ll need to pay. That’s why it’s critically important to set goals before forking over the cash.

Ask yourself how much you want to make from PPC. Do you want to make $5 from every dollar you spend on PPC ads? Are you using PPC to grow brand awareness? How much are you willing to spend to improve your visibility?

Asking yourself why you want to use PPC is a smart way to avoid costly mistakes down the road.

PPC Fee Structures

Another way to anticipate your costs and avoid over paying is understanding PPC fees. There are a few main PPC fee structures to know: percentage of spend, percentage of profits, number of keywords, monthly management fees, hourly management fees, and setup fees.

A common percentage of spend fee hovers around 10% percent to 20%, with a minimum fee between $300 to $500. Therefore, if your monthly ad spend is $1,000 expect to pay a POS fee of $300 or more per month.

Ideally, the more you spend each month with a results-driven PPC management company, the more sales you should generate. If your sales are increasing with your spend, this is a good sign and even an opportunity to expand your PPC strategy.

If you’re spending money and not seeing conversions, that’s a big red flag. This could mean that your PPC manager is not targeting the right keywords or using high-converting ad copy.

A PPC management Service may also charge you by the hour. If this is the case, it’s important for you, as a business owner, to be acutely aware of how those billing hours are used. A fee structure like this may help you identify opportunities for cutting back on your PPC budget.

Timing is Everything

If you’re new to PPC advertising, it’s important to understand that it takes a couple months or more to start seeing results. PPC success is an involved process that doesn’t happen overnight. For new accounts, PPC managers need time to generate keywords, perform market research, a/b test ads, set up analytics accounts, and hire copywriters before launching your campaign.

Once your PPC campaigns hit their stride so to speak, expect your monthly PPC management bill to even out. That’s why it’s important to consider contract length in your payment calculations.

Ask yourself, once your PPC campaigns are automated and performing well, how long do you want to use your PPC management service? Would you rather use select services moving forward? Confronting these questions ahead of time is one way to save money on future pay-per-click costs.

Consider a 3-month contract first and go from there. You should also ask yourself if you want a contract that auto-renews every few months.

What’s Your Return on Ad Spend?

If you’re paying too much for PPC management without a decent return on ad spend (ROAS) to match, then stop what you’re doing and reassess your PPC plan.

One rule of thumb is to divide your total conversion value by your total cost of advertising. For example, let’s say you have a lead generation company. If you spend $10,000 on an AdWords campaign that generated 350 leads, and you sell 200 of those leads to an agency, your total conversion value would be $70,000. Divide your conversion value by your ad spend, and you would have a ROAD of 7% or 700% – not bad!

Investing your PPC efforts where they matter most is a surefire way to boost your ROAS and save money in the long term. But is your PPC management Service making the most out of your budget?

Moving Forward

Now that you have a feel for PPC pricing, it’s time to choose the right management solution for your needs. Use this post as a checklist as you plan your budget and narrow down your choices.

Don’t forget–knowledge is power! Check back often for more insider tips or contact us now to speak directly to one of our own PPC experts.

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