Matthew is a marketing expert focusing on the SEO & martech spaces. He has written over 500 marketing guides and video scripts for the WebFX YouTube channel. When he’s not striving to put out some fresh blog posts and articles, he’s usually fueling his Tolkien obsession or working on miscellaneous creative projects.
There are several things that set pay-per-click (PPC) advertising apart from other digital marketing strategies. Some of those things are good — like the fact that PPC drives fast results — but others aren’t so pleasant. For example, PPC tends to be a more expensive strategy, with advertisers paying a direct fee each time someone clicks on one of their ads.
Because PPC has direct action costs, it’s particularly important to track whether you’re earning an overall profit from your paid ad campaigns. That’s why you need to track PPC return on investment (ROI). But what is PPC ROI, and what’s the best way to track it?
On this page, we’ll answer both of those questions by going through the following topics:
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What is PPC ROI?
PPC ROI is a measurement of how much revenue you earn from your PPC campaigns relative to how much you spend on them. Basically, tracking ROI helps you determine if your paid ads are worth the money you’re spending on them. A positive ROI represents a profit, so you want your ROI to be as high as possible.
PPC ROI vs. ROAS
Many people get confused between paid advertising ROI and return on ad spend (ROAS). The two metrics are very similar, but it’s important to understand the difference.
ROAS focuses on specific campaigns. It’s also limited to the money directly spent on clicks in that campaign. So, for a given ad campaign, the ROAS would simply tell you how much money you spent on clicks relative to how much you earned from those ads.
ROI is much more big-picture. Rather than focusing on individual campaigns, it looks at your PPC strategy as a whole. And it doesn’t just account for direct ad spend — it factors in the total cost of your strategy, including the cost of purchasing specific tools or implementing tactics outside of specific campaigns.
What is the PPC ROI formula?
Given what we’ve just discussed, calculating your PPC ROI is fairly simple. You can just use the following formula, with the final result being expressed as a percentage:
PPC ROI (%) = (total revenue – total expenses) / total expenses x 100
The real trick is figuring out what earnings and expenses to include in that calculation. You’ll need to spend some time tallying up all the different elements of your PPC strategy you’ve spent money on, and then make sure to factor all of them into the “expenses” part of the formula.
5 tips on how to track PPC ROI
Now that we’ve established the definition and formula, let’s talk about how to track PPC ROI. For best results, you’ll want to follow five steps:
One of the first things you should do is make sure you have conversion tracking and offline conversions set up within each of your ad platforms. This allows you to trace specific sales (and therefore specific amounts of revenue) back to your paid advertising.
You can also attach a dynamic value for ecommerce sales, or different values for different lead stages. For instance, you might assign a higher value to a sales-qualified lead (SQL) than to an unqualified lead. You can even sync specific sales back to specific campaigns for higher accuracy.
2. Centralize your data in a CRM
You probably use multiple platforms and tools to track your PPC data, which means you have data coming in from several different sources. To help you unify that data and make it easier to total up your earnings and expenses, you should aim to have a platform that functions as a single source of truth.
Expert insights from
Kayla JohansenInternet Marketing Specialist at WebFX
“As advertisers adopt increasingly cross-channel strategies to reach their target audience wherever they spend time online, implementing a single source of truth for your PPC reporting is becoming even more critical. With a single source of truth, you can unify data from several different PPC platforms to help you accurately track your ROI.”
As we’ve already seen, part of calculating your PPC ROI involves totaling up the revenue you’ve earned from your PPC strategy. The question is, how do you do that? Imagine a situation where someone buys after looking at three things: A blog post, a paid ad, and an email from your company. To what extent was that sale driven by the paid ad?
That’s the question you’ll have to answer. There’s no right answer — it’s up to you to decide how you attribute revenue to your marketing campaigns. To do that, you’ll need to decide on an attribution model. You can then use that model to determine when (and to what degree) you credit your PPC with driving revenue.
4. Create dedicated landing pages
The way paid ads work is that people click on them and get taken to dedicated landing pages. Those landing pages then encourage them to convert. At least, that’s the way it should work. Some companies just have all their ads send people straight to their website’s homepage. But that’s not the way to go.
You want to create a different landing page for each ad campaign you run. For one thing, that allows you to target people with more personalized messaging. But it’s also important for calculating your PPC ROI.
When you have a different landing page for each ad campaign, it makes it easier to track which campaigns drive which conversions. You can put UTM codes on each landing page, which your ad platforms can then track so that you can easily tie revenue streams back to specific campaigns.
5. Regularly calculate related metrics
Finally, it’s important to recognize that ROI is not the end-all, be-all of paid advertising. You’ll want to keep track of other important PPC metrics, too, including:
These metrics will help you track the profitability of specific campaigns, which means you can delete or reoptimize ineffective campaigns and replicate the success of effective ones. That will help you increase your overall PPC ROI over time.
Increase your paid advertising ROI with expert services from WebFX
Having the PPC ROI formula helps you calculate your ROI, but it doesn’t help you improve it — which is ultimately what you want. The higher your paid advertising ROI is, the more revenue you earn. But optimizing your PPC campaigns to deliver a higher ROI is a lot of work, which is why many businesses partner with a professional PPC agency like WebFX.
With over 28 years of experience driving revenue for businesses, we know how to build PPC campaigns that work. By partnering with us, you can boost your ROI to new heights, calling all the shots without having to navigate the workload yourself.
Matthew is a marketing expert focusing on the SEO & martech spaces. He has written over 500 marketing guides and video scripts for the WebFX YouTube channel. When he’s not striving to put out some fresh blog posts and articles, he’s usually fueling his Tolkien obsession or working on miscellaneous creative projects.
