Shimon Sandler

How to Calculate Online Metrics

Here is a handy Reference Sheet that shows how to calculate ROI, Conversion Rate, and other specific online metrics. These calculations are applicable for Search Engine Marketing, or any Pay per Click campaign.

1) To calculate Cost per Acquisition (CPA):
CPC/Conversion Rate

2) To calculate CPC:
Cost of Acquisition*Conversion Rate

3) To calculate Conversion Rate:
CPC/Cost of Acquisition

4) To calculate the # of Conversions:
Total Clicks * Conversion Rate

5) To calculate ROAS (Return on Advertising Spend):
• (Revenue-Advertising Cost)/ Advertising Cost
Then, multiply the ROAS by 100 to express as a percentage.

6) To calculate: Average CPC:
Total Cost/Total Clicks

If you are in the Lead Generation business, and you have a call center, then there are additional metrics and calculations to take into consideration. The percentages need to be based on actual call center numbers.

For example,
Lead Generation Assumptions (hypothetical):
• Click to Web Form Contact percentage=1%
• Contact Form to Lead percentage=35%
• Lead to Conversion percentage=4%

1) To calculate # of Contacts:
Click to Contact % * Total Clicks

2) To calculate the # of Leads:
# of Contacts * Contact to Lead percentage

3) To calculate the # of Conversions:
# of Leads * Lead to Conversion percentage

4) To calculate Cost Per Lead:
Cost/Leads

To improve your online metrics there are various PPC Strategies to experiment with.

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Comments

  1. Here is another good one for you. Cost per net click. This formula figures in bounce rates to determine how much ‘good’ PPC clicks are costing you.

    Total Cost for Clicks / (Number of Clicks * (100% – Bounce Rate%))

  2. Calculating CTR is not difficulty at all. All you need are the ad impressions and the clicks that ad received and the formula:

    Clicks / Ad Impressions= CTR

    A website with 100 impressions and 1 click would have a ctr of 1%. A website with 1000 impressions and 1 click would have a ctr of 0.1%. A website with 2345 impressions and 46 clicks would have a ctr of 1.96%.

    The first three digits of the CTR are placed before the decimal point while the remaining are placed after it.

    For a CPC advertising what CTR is ideal!
    It should be 1.00% +.

  3. Interested in learning more about calculating the value of a web lead? Check out http://goo.gl/0d5JW.

Trackbacks

  1. [...] So, how to fight back and win, in the highly competitive Search landscape when bidding wars are becoming more frequent? In this post, I’ll discuss a few PPC strategies involving the use of technology and rules-based bidding. 1) ROI based bidding, and CPA based bidding: This rule will move your bid up or down based on the ROI or CPA of individual keywords. There is a minimum amount of clicks necessary before the changes are made. ROI and CPA based rules adjust bids based on clicks and conversion tracking data. [...]

  2. [...] Should you start bidding high (aggresive), and then lower your bids gradually to the sweet spot based on ROAS, or some other metric? Or, should you start bidding low (conservative), and then raise your bids to the sweet spot? [...]

  3. [...] For a brand awareness campaign, low impressions are definitely a concern because a large part of branding is the message association. On the other hand, for a direct response campaign, low impressions are not that important because the key performance metrics are usually CPA or ROAS. Brand engagement is different. That’s about the clicks, not the impressions. Low impressions can also indicate that the total amount of people searching on your terms, is minimal. That means, time for a keyword expansion. Additionally, most people just look at the 1st page results. So, if the ad is on the 2nd page of the SERP’s, it could reflect in low impressions, and be a reason to increase the CPC’s to gain a higher position. Thereby, increasing the impressions. [...]

  4. [...] General finding regarding High volume vs. Low volume Search Ads / Keywords: – Conversion rates for keywords generally fall when rank is lowered. This is mostly caused by the decrease in click potential for a lower ranked search ad. However, the study concluded that conversion rates for low volume keywords may actually increase at lower ranks. Key takeaways from the study: 1) Advertisers must do a balancing act between efficiency and volume. Just by getting the best possible ROAS at rank #10, an advertiser could be missing out on a much higher volume of conversions if they increased the ad to a slightly higher rank. By decreasing rank, an advertiser saves on the CPC. However, that most likely will cause a reduction in site traffic. Thus, lowering CPC’s could do more damage than good by potentially lowering the conversion rates. [...]

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