How to measure your ROI from a Google AdWords campaign
if you’re spending money and you’re not getting back more money than you’re spending - you’re wasting your hard earned cash. You’ve got to stop the leak. You also should know if one Ad is generating more profits than another - so you can put more money into the profitable one.
Measuring your ROI doesn’t have to be overly complicated. You do need to do a bit of math, but, hey, that’s part of business. Let’s take a look at how to calculate your ROI.Your ROI is your revenue less your cost of the thing you sold divided by the cost of the goods sold.
So, for example, let’s say you sell t-shirts. The cost to produce one t-shirt is $10, and you sell them for $20. You sell 100 of them from advertising them on Google. Your revenue (as you can see) is $2,000. Your cost to produce them was $1,000. And you spent, let’s say, $500 in advertising.
Your ROI is: 2,000 - (1,000 + 500)/ (1,000 + 500).
Do the math. Your ROI ratio is .33, which is 33%.
For example, let’s compare the following AdWord campaigns
| Campaign X | Campaign Y | |
| Total Spend |
£1,000
|
£250
|
| Click throughs |
5000
|
1000
|
| Conversions |
50
|
25
|
| Conversion rate |
0.01
|
0.025
|
| Revenue |
£1,500
|
£750
|
| ROI |
50%
|
200%
|
