PPC / Adwords Campaign ROI Calculator

This PPC ROI calculator analyzes the return on investment for running a PPC campaign. PPC (Pay Per Click) advertising is a common traffic source for affiliate marketers. This calculator estimates how much of the traffic you can convert (get a paid sale) and compares your earnings with the cost of running the campaign. It is intended to help with analysis of prospective campaigns and what-if scenarios. If you have already run the campaign and are trying to package up the results, you may find our marketing roi calculator helpful.

The traffic source is modeled using an advertising budget and an expected average cost per click (CPC) amount. These are combined to get an expected number of visitors. This is presented as traffic coming to the landing page.

We modeled traffic conversion rate as a multi-step process. Visitors arrive at the landing page, where they are presented with your outrageous claims and wishful dreams. A certain percentage are bold enough to proceed to the merchant's site. Once at the merchant / order form, a certain percentage of these brave souls will go ahead and pull out the credit card. A sale will occur, at which point the affiate will earn a commission. (Yay! We get to eat tonight!).

The PPC campaign ROI calculator takes all of these statistics and packages them up into an aggregate report on PPC campaign profit and return on investment. This describes your expected return from the campaign.

The more observant members of the audience are raising their hand at this point to point out various other sources of complexity in the process. We run affiliate offers as well and here are some suggested solutions.

• Upsell / Add-on: Estimate how much upsells add to your total commissions commission and use the adjusted number. For example, if 80% of your commission check comes from initial sales and 20% from upsell, bump payout up 25% (20% / 80% = 25%).
• Residual Value: Needed for long term revenue share deals. Estimate the lifetime value of a customer, from an affiliate's perspective. Use that as your commission number. Attempt to explain to your spouse the money is coming. (One major downside of residual revenue-share deals is cashflow stinks.)
• I am the merchant: Use click-throughs to your order form in lieu of merchant clicks; it should effectively be the same thing. If your affilates are dumping traffic to your home page rather than your order form, someone isn't doing their job.
• Email Nurturing: We harvest customer emails and badger ("nurture") them into accepting our (latest, reduced, last chance) offer. No problem, measure what % lift in conversion can be attributed to your lead nurturing emails and bump up the appropriate conversion rate by that amount. If the affiliate is emailing, bump up landing page conversion. If the merchant is doing it, bump up the merchant conversion. (there's a gotcha - affiliate warms up a prospect via email nurturing, only to lose them in merchant conversion.) )

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