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Return on Investment Pointers for Marketers - BrandNexa
Return on Investment Pointers for Marketers

It is imperative for pay per click (PPC) marketers to be aware of all the factors that influence the  overall profitability of their campaigns. They need to understand Google Ads and the auction process at a deep level while also considering other financial metrics based on microsoft Ads, Facebook Ads, Instagram, and so on. 

Return On Investment Pointers For Marketers
Return on Investment Pointers for Marketers

Marketers need to perform the following calculations in order to gain knowledge and practice:

  • Establishing the ROAS (Return on Ad Spend): Marketers need both the total cost of advertising and the total conversion value in order to determine the ROAS (return on ad spend). They need to use the formula: total conversion value / total cost of advertising in order to calculate the ROAS. 
  • Establishing the break-even ROAS: The PPC account managers need to know the profit margin of their clients in order to determine the break-even ROAS for them. They need to use the formula: 1 / profit margin to calculate the break-even ROAS. Marketers can boost their profit margins and consequently reduce their ROAS by determining the average lifetime value (LTV) of a customer or a client.
  • Establishing cost per conversion for form submissions: Marketers need to know the average cost per conversion (cost per form submission) as well as the average form conversion rate (the percentage of forms that convert into sales) so as to determine the  cost per conversion for form submissions. They need to use the formula: average cost per conversion in Google Ads / form conversion rate in order to calculate the true cost per conversion for form submissions.
  • Establishing the break-even cost per conversion for form submissions: Marketers need to use the average profit per sale and the form conversion rate so as to determine the break-even cost per conversion for form submissions. They need to use the formula: average profit per sale x form conversion rate in order to calculate the break-even cost per conversion for form submissions.

Establishing the break-even cost per conversion for complex sales cycles: The marketers need to know about the average profit per sale, the webinar conversion rate (the percentage of registrants that attend the webinar), and the sales conversion rate so as to determine the break-even cost per conversion for complex sales cycles. They need to use the formula: (webinar conversion rate x sales conversion rate) x average profit per sale in order to calculate the break-even cost per conversion for complex sales cycles.