AdWords Tips, & Tools

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1. Budget

Your AdWords budget should be based from your Marketing Budget. If your plans on spending money on advertising this year a portion of the budget should go to online advertising. When you hear agencies and Internet Marketing Specialists talk about "Budget" all you need to think about is your advertising budget and the portion that is going to go to Online Advertising. At the end of the day it is your "Advertising Budget" that matters when evaluating the effectiveness of your advertising campaigns.


2. Cost per Click

If a customer sees your ad and clicks on it to learn more or to do business with you, it is recorded in your Google account as a click. Clicks are charged at a variable rate as determined by Google's algorithm. We monitor your clicks and click thru rates through Google Analytics to see how many people choose to enter your website from your ad and how much we are charged for that click.

3. Conversion Rate

A conversion is what happens after a user clicks on your ad - whether they purchase a product, fill out a form, watch a demo, or call you on your phone. We monitor your website conversions using both Google AdWords and Google Analytics.The conversion rate is measured as a percent (%) and it is the number of conversions per click (visitor to your site)

4. Value per Conversion

We assign a "Value" per conversion to each of your "Website Goals". An order on a eCommerce store would be a "Goal". So, say a customer purchases a product for $100 and you have a Gross Margin of 40%. Then you have a Value per Conversion on that product of $40 (the gross profit).


Also, we you can apply a Value for each conversion on your website - not including eCommerce purchases. We use simple math. Lets say for example that for every 10 times someone fills out a "Contact Us" form you receive a sale. And that sale has a Gross Profit value of $200 (you set the Gross Profit figure)  Then the value of the "Webform" conversion would be $200/10 = $20.


5. Total Return

The total return is calculated as a dollar figure ($) using the total number of conversions x the value per conversion. This is the total Gross Profit Dollar Value generated by the campaign.


6. Marketing Campaign ROI

To calculate the Campaign Return on Investment (ROI) take the Total Return less Agency fees / Budget Spent. Here's a quick calculation worksheet for managing your advertising budget:




Creating the AdWords Budget


  AdWords Budget
Average Cost Per Click
  Total Clicks (visitors)
  Expected Conversion Rate
  Value per conversion
  Total Expected Return
  Agency Fees
  ROI  54%  


If you are interested in calculating a value for your website goals give us a call and we can go through the steps.