Every online advertiser knows that search engine marketing is a contributor for generating sales, but how do you know if your online campaign is actually producing a return on investment?
Calculating your return on investment (ROI), or rate of return, is not only easy to do, but it can also help you determine how your overall campaign is performing. ROI can be calculated by using this formula:
ROI = (Revenue – Investment) Ã· Investment Ã— 100
For example, if you generated $3000 in revenue and spent $150 in online advertising, your ROI would be 1,900%.
While attracting searchers to your site is important for branding your business, products and services; generating revenue is really the main objective. That being said, it is not suggested to completely cease all branding campaigns, as these visitors may convert to customers at a later date. Try testing different strategies such as, lowering campaigns budgets or excluding geographic areas that generate a large amount of visitors, but do not necessarily result in sales.
I have utilized these suggestions for several clients and as a result, have seen dramatic improvements in not only in the average order value and amount of sales, but more importantly the ROI. While there is no exact formula for making a campaign perform; testing one strategy is not recommended. You do not want to automatically deem your campaign a failure if you’re not seeing a positive ROI within the first days or weeks of beginning a new campaign. It can take time to determine which technique works best for your campaign; so keep testing and experimenting.