When putting together your Pay-Per-Click (PPC) Strategy, it can be a very intimating process trying to determine how much money you should be bidding for the right keywords for your business.
Very often with a small business, it’s very easy to surpass your advertising budget and it may not be so clear whether or not you are actually seeing the results of your work and really getting a real return on investment (ROI). In simple terms for this example, ROI is simply measuring the revenue that is directly related to the cost of your PPC campaign.
Let’s use www.allieddoorinc.com as an example. (Please note all assumptions are made-up and simply used to demonstrate this example)
Allied Door Inc.
Allied Door Inc (Allied) offers a number of services such as installing a garage door in Naperville, or repairing abroken garage door in Chicago. Allied also sells and repairs accessories such as garage door openers. They would love to increase the number of inbound leads and the idea of being able to generate more leads through Google search is an exciting prospect. By utilizing PPC, Allied is hoping to generate more leads for their business. They know that they can convert 20% of inbound leads into customers, and the average customer is worth $1,000. Since they know how often they close on a lead, as well as how much each sale is generally worth, Allied can then measure their ROI over a period of time.
As mentioned before, these are not real numbers.
KEYWORD: Garage Doors Naperville
COST PER CLICK BID: $1
Click-Throughs: 100 per month
Form Fills & Phone Calls: 10 per month
Close Rate from Form Fills & Phone Calls: 20%
Average Gross Margin of Sale: $1,000
Total Monthly Revenue: $2,000
Total Monthly Cost: $1,000
ROI = (Gain from investment – Cost from investment)
Cost of investment
= ($2,000 – $1,000)
So in this simple example, if Allied had 100 people click-through on their PPC ad monthly, and each ad cost $1 per click through, then their Cost of investment would be $1,000.
Of those 100 people who clicked through to Allied’s landing page, that had an information form to fill out or a number to call, 10 people on average would do that, and 20% actually signed up, then essentially 2 people would sign up, at an average price of $1,000, or $2,000 total that month. Since it only cost $1,000 to get the $2,000, an ROI of $1,000 or 100% would have been achieved.
Sounds great, right? Yes this may be simplistic in the example, but that is essentially the idea. As long as you can clearly track your costs and your sales which are driven by the PPC, then you can determine your ROI.
So how can we track how we are doing? So how do we know how many phone calls or form fills we have received over a certain period of time?
The simple way to track phone calls is to tie in specific landing pages with unique phone numbers that will track every time a call is made to that number. By doing this, you are able to know that the call was driven specifically from a particular PPC campaign. There are companies that can provide you with inexpensive, toll-free numbers that can be tracked and recorded. (I will discuss this process in a future blog.)
When someone fills out a form fill, normally a thank-you page shows up after the form is filled out and a customer pushes a “send” button. It is possible to track the number of times the thank you page is hit, thus knowing each time a form is completed. By tying Google analytics to this page, you will know the frequency the thank you page is being visited. (I will discuss this in a future blog).
So by setting up both a specific number with Allied Door Inc., and tying goal-setting with form fills, we can see whether or not our PPC campaign is really providing us with an ROI.
Want to learn more about how PPC can help drive more leads for your business? For more information, or if you would like to learn more general information, write to us at [email protected], or check out our site at www.deliveringcustomers.com.