Pay Per Click ROI - Digitla Third CoastWhen we start working with a new PPC client, we typically have several conversations about campaign goals and how we will measure success.  One tool that is almost always in our bag of tricks is Google Analytics (GA).  GA makes it easy to track on-site goals and calculate advertising Return on Investment (ROI), so without further ado, here are 4 features of Google Analytics that you can use to help illuminate paid search ROI.

1. Campaign Value Measurement Methods

  • Ecommerce Businesses: The best way to see ROI is to have ecommerce tracking activated. This feature allows you to track data from your shopping cart and import it into Google Analytics to enable deeper reporting on transactions and how they relate to your campaign spend. It’s not the most simple task, so it’s advised to have your webmaster install the code, unless you’re confident in your development skills.
  • Lead-Based Businesses: It’s advised that you estimate your average value per customer acquisition (or conversion) from your website. For example, if an average new client is worth $5,000 to your business, and you convert 1 in 10 online leads into a customer, then each lead is worth approximately $500. Set $500 as your goal value and you’ll be able to get additional insight, reports and have a very simple ROI calculation in Google Analytics.

2. Enabling communication between your paid search campaign and GA campaigns.

  • AdWords – Because Google owns both AdWords and Google Analytics, integration between the two services is very seamless. After adjusting a couple quick settings, you can populate GA with all of your important data, including ad costs.
  • Bing Ads, Facebook Ads and other PPC platforms – Since Google Analytics does not integrate as well with these other non-Google-based systems, you’ll need to tag your destination URLs (or add information to the end of a web page address) so that you can pass valuable data to GA. Use the Google URL Builder to send information such as source, medium, campaign and keyword driving your website traffic and compare your ROI by platform. Unfortunately, cost data will not populate in GA, but you should have the necessary pieces to calculate it.

Once you have everything set up and tagged appropriately, you can kick back and relax while you accrue data. Depending on the traffic volume to your website, your new reports may be available the day you set them up.

3. Adwords Reports.

It’s easy to start with AdWords since there is a report in GA built specifically to house AdWords Data. In GA, go to Traffic Sources > Advertising and you’ll be able to see a few different reports. Hit the “Clicks” button in the Explorer tab just above your data graph, and you’ll now see cost data, Click Through Rate (CTR), Average Cost Per Click (CPC), Revenue Per Click, ROI and Margin.  (It’s important to note here that GA’s margin is not true margin, as Google does not calculate the cost of your goods, labor or additional expenses).

Google Analytics Campaign ROI Report This is an example of a Google Analytics Adwords ROI Report.

You can also calculate ROI yourself by knowing your costs and return. Since AdWords is the only PPC platform that allows you to directly import cost data, you’ll need to calculate ROI manually for your other online advertising initiatives. The basic equation is simply:

ROI = (Revenue Gained – Cost of Investment)/Cost of Investment

4. Multi-Channel Funnels.

Not all conversions are created equally, but with the help of multi-channel funnels in Google Analytics, we don’t have to live in an all or nothing world. By default, GA only reports a conversion and revenue resulting from the last touch. This means, that if someone finds your site through PPC, remembers your site and comes back as direct traffic, then finally comes back again through referral traffic (like from another site, a Facebook page, or even an email campaign), the final referral source would get credit for the conversion or sale. By accessing your multi-channel funnels reports, you can gain insight into how your various traffic sources play together and contribute to the conversion.

Google Analytics multi-channel funnel Example Multi-Channel Funnel report showing channels that contribute to a conversion.

Proving ROI is something we’re tasked with every day at DTC, but you don’t need to be a paid search professional to access the reports or methods that we use. Understanding where your dollars are going and what you’re gaining as a result is one of the most empowering and rewarding tasks an advertiser can perform. This analysis will inform your next marketing or sales move and help you increase return on your ad spend. Give it a try, I think you’ll return for more tips on managing PPC campaigns. Luckily, we’re here to help.

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