May 19, 2016 | Sarah Danks


Calculate Return on Ad Spend

Today I’m here to talk about a neat PPC calculator we created. It quickly calculates return on ad spend (RoAS) using a few key data points from any PPC campaign. But the goal of this calculator isn’t so much to calculate RoAS as it is to forecast lead generation.

Here’s how you can wow your PPC clients: plug in some data, hit “Calculate” and show them their current return on ad spend. Now, the toughest part of this equation is getting your client to a) know and b) be honest about their close rate and the average lifetime client value.

Once they figure out that math, it’s easy to see their current RoAS.

An Example of PPC RoAS:

Let’s do a little “what if” example of RoAS with a family law attorney. We’ll choose a conservative monthly PPC spend of $5,000.00.

Since we deal — and have dealt — with a LOT with law firms, we know the average cost for family law-related keywords in a competitive market is around $12.00 per click.

Let’s say the lawyer in question is directing his PPC traffic to a relevant page on his website. If he’s tracking conversions within the AdWords dashboard, all we need is the conversion rate.

If, however, conversions are not being tracked with AdWords, we have to delve into the Analytics to find the conversion rate of his site. We see his site converts at 4.0%. Since that doesn’t include phone calls, we double that estimate to reach an 8.0% conversion rate*.

Mr. Family Law Attorney tells us his average close rate is around 20.0%, and that the average lifetime client value is $7,500.00.

Armed with all this juicy information, let’s calculate his current RoAS:

Screen Shot 2014-03-26 at 12.00.03 PM

Not too shabby!

But, what happens when we up the ante by showing him how much return on ad spend he COULD be getting if we build him a custom landing page…

…one that converts at 15.0%:

Screen Shot 2014-03-26 at 12.00.20 PM

Wow. Big jump in revenue — from $50,000 to $93,750!

Okay. So that’s all fine and dandy, but what if you’ve got a client who isn’t currently utilizing pay-per-click, and you’re not only trying to sell them on PPC itself, but also on custom landing pages vs. “just use my website.”

That means you don’t have monthly ad spend, average cost-per-click, OR conversion rate data to plug into our nifty RoAS calculator.

Now what?

Well, what you can do is find out what they’re willing to spend per month (enter into Monthly Ad Spend field).

Then, to find the average cost-per-click (CPC) info, you’ll need to do a little research in the AdWords Keyword Planner. Look up some key terms relevant to the client’s industry and choose an average cost-per-click (enter into Avg. CPC field).

keyword-planner-family-law-terms

For the Average Conversion Rate field, you’ll have to go off of their current website conversion rate. Of course, that’s assuming they’ve got trackable lead generation (i.e., they’re using unique confirmation pages) on their site and are actually tracking those leads in Analytics. Also, the conversions you see in their analytics program (most likely) won’t include phone calls.

Then you still need to ask the client for their close rate (lead-to-sale) and their average value of the lifetime relationship with their clients. Whew.

Hit “Calculate” and see the revenue: the return on their ad spend. Of course, it’s conjecture at this point, but still impressive to see the numbers and how their lead generation could look (when you plug in the “and then THIS is what you COULD be getting if you use custom landing pages!” conversion rate number).

Something to note with this calculator: it also shows the difference in lead generation/return on ad spend when using a simple website page as a “landing page” vs. a real, custom PPC landing page.

See, here’s the thing about custom landing pages in regards to pay-per-click: we’ve found that ours convert anywhere from 10-30% (depending on industry and target market).

So, are you ready to check your clients’ return on ad spend? We invite you to play around.

Check Out Our RoAS Calculator:

Goal: Lead Generation

*denotes required input

  • *Monthly Ad Spend:
  • *Avg. Cost-per-click (CPC):
  • Total Clicks:
  • *Avg. Conversion Rate:
  • Leads/Month:
  • Cost/Lead:
  • *Close Rate (Lead to Sale):
  • *Avg. Lifetime Client Value:
  • Revenue:


Let us know what you think in the comments below!


*We’ve found that doubling the website’s conversion rate gives a pretty accurate depiction of the entire conversion rate (phone calls + online leads). Of course, if a client is already tracking phone calls via 3rd party then you’re way ahead of the game.


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