Does anyone have any guidelines or ideas on what should be considered a good ROI on PPC investments?

For example, if a client spends $3000 a month on PPC's and those visitors translate to $30,000 in actual sales, is that good, bad, average, or what?

Or using another metric, if 10% of the visitors driven to a site by PPC result in sales, is that good?

I realize it probably varies from industry to industry but are there any commonly accepted yardsticks to measure this by? One of my clients asked and I'm not sure how to respond.

THANKS!

there really cant be a set standard. it depends on your business costs and marketing budget.

some advertisers ensure their accounts are self funding after accounting for the time they work on them and cost of products, but not all accounts are. also lifetime value of a customer might be hard to factor in for some people.

Does anyone have any guidelines or ideas on what should be considered a good ROI on PPC investments?

For example, if a client spends $3000 a month on PPC's and those visitors translate to $30,000 in actual sales, is that good, bad, average, or what?

Or using another metric, if 10% of the visitors driven to a site by PPC result in sales, is that good?

I realize it probably varies from industry to industry but are there any commonly accepted yardsticks to measure this by? One of my clients asked and I'm not sure how to respond.

THANKS!
if there is more than $3,000 of profit in the $30,000 in sales you are headed in the right direction.
With any marketing campaign you don't stop just because it is profitable... you need to AB test creatives and landing pages until you know you have the best possible combination giving you the best possible ROI.
Test, test, test.... you can't give up now.

CTR is part of it... but you need to filter the right traffic and that is not tied just to CTR... it needs CPA or conversion rate numbers to make better decisions.

Some ads will get great CTR but then do not close enough, while ads with lower CTRs close better and subsequently have great CPA.

You are at the edge of the water.... don't be afraid to get wet... the water is fine so long as you are careful and watch for the undertows!!!

I like to compare results with a month of contextual match on, then off. Usually the "content off" leads to a much higher ROI, from our experience. However, one trends that busts that theory are the much higher CTR's and conversions from content match in geographically-modified searches that we have tested.

While I agree that as long as you made money (in the above example at least $3K), you should be happy, more is always better!

The 10% metric can go both ways, but for the most part should be considered good. If you are bidding on a proprietary term, I would hope for at least 25-30% conversion. Yet in a very competitive field and with a high profit margin, even as low as 1% might be good enough. It all comes down to the age old question: how much would you pay for a lead/sale. If you are paying more per conversion than you want to, then something needs to be done-most likely with the landing page.

Bottom line: PPC Campaigns consistently deliver higher ROI's for our clients than any other form of marketing, other than SEO of course :p

One of my clients asked and I'm not sure how to respond.
Make something up. There is no way you can answer that, so why even try to get a serious answer?

Seriously, just dazzle them with BS, and talk about it all being "about this campaign being a success, not what every other campaign does".

My $0.02.

[QUOTE=projectphp]Make something up. There is no way you can answer that, so why even try to get a serious answer?

Seriously, just dazzle them with BS, and talk about it all being "about this campaign being a success, not what every other campaign does".

My $0.02.[/QUOTE

Wow... I am impressed ... make something up??????]

LOL. I always try to impress :)

IMHO, people too often try to answer impossible questions (http://www.chelationtherapyonline.com/anatomy/p74.htm).

Why bother? How can anyone answer an impossible to answer question?

Also, what will knowing an answer achieve? 2% is the accross the board CTR on AdWords according to AdWords rep. What does that mean, and how is it any use? Stuffed if I know.

Any answer to "what should be considered a good ROI on PPC investments" would be speculation (a fancy way of saying "making it up") so one really has two choices:
1. Defelect into asking a productive, useful question or
2. Speculate (aka make something up).

Hutch has 1 covered (".. it ... varies from industry to industry"), and option 2 is all that is left to offer.

But really, a "good ROI" is anytime spend < margin. That is Good, the other way around is bad.

But really, a "good ROI" is anytime spend < margin. That is Good, the other way around is bad.

I think I'll take this tactic instead of "making something up." ;)

Thanks to everyone for their input.

ok, so i jumped into this one WAY late, but couldn't resist throwing my $.02 in as well.

A "good" ROI for PPC is any number that is higher than any other form of marketing they have...i.e., if they know they can get a 5% ROI from print, and a 7% ROI from PPC (hopefully way more than that though), then they should pump more money into PPC until that number drops to equal their next highest ROI marketing channel.

or, in short terms, as long as you're making more money per dollar you spend on this than anything else, you might as well keep the money flowing to Google and YSM! (and, as a result, to you).

never miss a chance to upsell when discussing PPC with a client :cool:

Randolph, that's probably the best response so far.

I'll ask them to compare their PPC ROI with other forms of advertising as their own internal "yardstick" (or any other metric you want to call it). If it beats those, which they say it is, then who can argue with the results?

thx!

ok, so i jumped into this one WAY late, but couldn't resist throwing my $.02 in as well.

A "good" ROI for PPC is any number that is higher than any other form of marketing they have...i.e., if they know they can get a 5% ROI from print, and a 7% ROI from PPC (hopefully way more than that though), then they should pump more money into PPC until that number drops to equal their next highest ROI marketing channel.

or, in short terms, as long as you're making more money per dollar you spend on this than anything else, you might as well keep the money flowing to Google and YSM! (and, as a result, to you).

never miss a chance to upsell when discussing PPC with a client :cool:
Obviously a good "ROI" for PPC is anything higher than the rest.... but more acccurately a good ROI is one that still is profitable when all expenses to produce it are considered.... that is not only the cost of the clicks but any expense for the person who runs the account etc.
If you can show a $10 investment makes them $15 or $5 profit (here 50%) then they should say to you okay here is all our money go make 50% more.

In reality it may not quite go that far but they should have no real restraints on spending so long as the turn around on profits continue.

When the margins reach a lower level and are barely above the profit line... what needs to be considered is can we do something else for better profits, does the increase in volume from PPC allow us to lower overheads on getting or delivering the product/service or what is being sold.

In reality it may not quite go that far but they should have no real restraints on spending so long as the turn around on profits continue.
Exactly! If you spend $1 and make $2 in margin, spend until you can't spend anymore.

The problem with comparing different advertising media is that an ROAS (return on advertising spend) of 8 to 1 in one area, and 6 to 1 in another, may be better than spending more on the 8 to 1 and nothing on the 6 to 1.

The most valuable advertising mix for a business may not be to use just one media, but to use as many different types that are ROI positive as possible.

When you factor in unique customers, this is probably even mroe important. A radio listener is likely to be someone different to a fin review reader, who will be different to a Wrestling fan. If a product appeals to all three, you need your message to go out in all three places.

Also, I had a thought: perhaps what your client really wants to know is if you are doing a good job, that is, if the ROI you are achieving them is better than what they would get going elsewhere??

When measuring the success of a campaign, don't forget to measure what the customer will bring throuout their lifetime. If you only measure the margin of a single sale, you might be dropping campaigns that are profitable over the lifetime of the customer.

e.g.
Cost you $1 to get a Customer and you make $0.50 a sale. No profit on the first sale, but if the average customer signs up and makes at least three sales, then it is profitable.

I think the web has a lot of lifetime value opportunities that other mediums don't have that we forget sometimes.

Have fun and don't run with scissors.

Have fun and don't run with scissors.
I always wanted to know what my mother's screenname was... Hi Mom!

Or visit????? You still live at home but I never see you? Now that you are 35 I think it is time we had a chat......


Anyway, my question is serious even if my sign off wasn't.