Carrying the digital part of a business can be attractive, interesting, exciting. But analyzing results and measuring the effectiveness of actions is often not so pleasant. Before this is necessary to know that the measurement of results should be a priority in your business: if you do not track the investment you make in advertising your company is impossible to know what is the profitability that has occurred (if it exists said profitability). With Google Adwords you can track and measure any metric in a very simple way.
Calculate the return on investment of your business
When making an investment in advertising, you need to analyze if the budget invested has generated benefits for you. If you are investing more money than you are earning, you are wasting resources and you should stop that money leak, in the same way that you should know if an ad is reporting greater benefits than others to direct your efforts there.
Calculate the, ROI is not complicated and with a simple calculation you can know what your ROI in Adwords. The return on investment is a value (percentage) that measures the performance,use of an investment to assess how efficient the expenditure we are making in that item is.
ROI = (profit obtained – investment) / investment)
To measure sales ROI you need to know:
- what income did you make in your advertising campaign
- Costs of your assets
- advertising costs (you can check it in the same Adwords account)
In the case of online sales , there are two ways to calculate what the revenue generated by online ads has been:
- Create a specific landing page for your Google Adwords campaigns and calculate how many sales were made through this page.
- In the same Google Adwords tool, set up conversion tracking and connect it to the Adwords account. Once connected, place the code that has been generated in your landing page to track or you can also embed the code in the ‘thank you’ of your page, after the transaction has been completed. Another option is to use the objectives created in Google analytics to control conversions and sales in Google adwords.
In the case of offline sales , you can follow the sales made from Google Adwords: use discount or similar bonuses generated from your Adwords campaign and, when someone redeems the bonus, you can track and know where that sale comes from.
Calculating the ROI for conversions and web traffic is a bit more complicated, since in many cases we do not know the exact monetary value of the download of an ebook or the fulfillment of a form. How much is a click worth? Do all the clicks have the same value?
In these situations there are formulas that can help us in the study of ROI as cost per acquisition (CPA). This is a form of payment for online ads in which the advertiser does not necessarily pay before the ad is put into circulation, but it does so when the ad involves a sale.
The CPA indicates how much it costs your company to get an action (a sale or a lead, for example) from a user. The CPA can be determined earlier, such as when used in affiliate networks, but in this case, it is calculated by dividing the total costs of the ad by the total number of sales that have been obtained from the campaign.
CPA = (Cost / Sales)
KPIs to measure brand awareness
Because not everything in the digital field is reduced to sales, as we have seen, calculating the improvement or the increase of the brand notoriety of your company is possible through the Google Adwords display network.
Display ads are one of the most used ways to increase the reach of a brand, as these ads are displayed on sites related to the keyword we have defined in the ad description and through contextual targeting.
The most used KPIs are:
- Impressions : are the times that an ad appears on a search results page or on any other site in the Google network. This number represents the number of users who have seen your ad.
- CTR (Click Through Rate) : indicates the interest or relevance of your ads to the users to whom they are shown. Although there is no value to determine when we have obtained a good CTR and when not, it is understood that the higher your CTR, the more relevant the campaign is and it helps us to verify the commitment of the users. The CTR is calculated from the following formula:
CTR = (Number of impressions / Number of clicks) x 100
- Scope : is the number of users who have been exposed to an ad. The greater the scope, the more potential customers have been exposed, which impacts on a greater brand notoriety.
- Frequency : the average amount of times a user was exposed to an ad during a certain period of time. To determine this, Google calculates the estimated frequency by collecting data from a sample group and applies it to the set of all impressions.
KPI’s to measure sales and conversions
When a potential client performs the expected action (downloading an ebook, registering for an event, purchasing a product, etc.) a conversion occurs. The main KPIs to measure sales and conversions are:
- Cost of each conversion : within AdWords a value is assigned in euros for each conversion (very useful also when measuring ROI). You can configure a wide spectrum of reports to know where your conversions come from and where you should invest the most to optimize the benefits.
- Conversion Rate : Track the number of clicks you need (on average) to get a sale or another conversion.
- Landing page URL : you can measure the destination URLs (landing pages) that are generating the most conversions.
Try all or some of these methods to measure and analyze the results of your investment in Google Adwords and make sure that your business benefits improve more and more