by
Charlie Spargo
PPC training is coming up on November 6th, forming part of our trio of digital marketing essentials – and tickets are still available.
The PPC course will help attendees understand the situations PPC is best for, how to effectively run their own campaign, and provide techniques for successful paid search campaigns. It’s hosted by Ethan Giles, Senior Operations Manager at novi.digital, the data-driven, psychology focused digital marketing agency.
As part of Prolific Training, we’re running three separate but complementary digital marekting essentials courses – on the topics of SEO, Google Analytics, and PPC – which can be taken in any order. They will be hosted on a rolling basis, and will collectively enhance attendees’ knowledge and skills and give them usable techniques to take back to their own companies.
The next to take place will be Google Analytics 101 on October 16th, before PPC 101 at the beginning of November. Both are hosted at Prolific North’s HQ on Princess Street, and take place between 9:30am and 4pm.
To preview some of the practical and engaging content being covered at PPC 101 in November, Ethan has provided a summary of the best ways to achieve ROI from Google Ads.
Google Ads is one of the most effective advertising and marketing tools available to businesses. Getting access to nearly all internet users with direct advertising, the best part is the potential customer tells you what they want.
Despite this, it’s very easy to spend a lot without getting anything in return. This often pushes people away from using Google Ads.
novi.digital has worked with hundreds of businesses across hundreds of sectors, operating with different budgets, different-sized teams and different target customers, and each have something in common – they’ve all been able to generate ROI on Google Ads. Don’t believe anybody who tells you “it doesn’t work for us”.
To be able to generate revenue and profitable returns, you need to ensure you use the platform carefully and intelligently.
Your CPA is your Cost per Acquisition – in other words, how much you pay for a conversion. This is calculated by taking the number of conversions generated divided by how much you spent on the ads. For example – if you spend £1,000 and have £10 in conversions, your CPA will be £100.
You should know what you can or should be spending per conversion, otherwise you’ll be spending without knowing if it’s ever going to be effective or profitable.
Firstly, you need to ensure you are tracking conversions. Your conversions should be whatever the purpose of the site is – for example generate enquiries, get people to buy products, or encourage people to call. It may be more than one thing.
Secondly, you need to understand how much you can spend per conversion, i.e. what your Target CPA is. This may be different for different products and services – which, again, is fine. To calculate your Target CPA, start with your sale value. In our example, the sale value will be £100.
Of course, the amount you sell a service or product is not necessarily the same as the amount of money you make, so you need to calculate your profit on the sale value. In our example, we will state our margins as 50%. Therefore, sale profit is £50.
We then have to consider that not all enquiries will become sales. If you have an eCommerce site, then you can track sales directly – if you track enquiries, you need to be mindful that what you track is not a sale but a lead. You need to know how many leads become sales. In our example, we will say that 50% of all leads become sales. Therefore, our lead value is £25.
Next, you need to decide how much of the lead value you’re willing to spend to generate the lead. If you spend the entire £25 each time you generate a lead, you’ll never make a profit. This point is entirely up to your discretion, but will ultimately affect your bottom line – as you’re only able to work with your initial profit. In our scenario, let’s say we would be willing to pay 50% to generate the lead. Therefore our CPA is £12.50.
If we work backwards, we can see that if we spend £12.50 per Conversion, and 50% of those become sales, we’re spending £25 per sale, which is 50% of our profit. So take-home from each conversion will be £25.
Now you’ve calculated your Target CPA, you can bid more intelligently on Google Ads, ensuring that your bids are profitable and understand what keywords you can target. To be able to do this, you need the Conversion Rate, which can be found in Google Ads. If your Conversion Rate is 10%, for example, you could bid £6.25.
Ideally, you would calculate the bid for each keyword based on the individual keyword Conversion Rate. So some keywords you can bid higher than others.
Doing this calculation may show you that some keywords are simply too expensive to ever bid for – unless you’ve decided that the brand awareness and presence is worth the loss in direct profit generated by these keywords.
To learn more, keep an eye out for the next article in this series, and sign up for our PPC 101 training session, where we’ll be exploring this and a lot more to ensure your Google Ads campaigns are profitable, and are driving your business onto success.
