ROI- Return On Investment
(Revenue- Cost of Goods Sold)/ Cost of Goods Sold
Understanding return on investment is key to building a successful business to ensure you are headed towards profitability. This comes into play for Google AdWords because if one campaign is doing much better than another, it is important to put more of the budget towards the campaign that is successful. To measure your ROI well, you need to monitor you Conversions.
Tracking conversions is attaching a piece of code to part of your website that you want to track how many visitors participate in. This could be a subscription, a purchase, or even just a page on your site. It can also help you know which keywords or ad were helpful to get that person to your site.
Optimizing Ad Performance
Once you get your ads and tracking started, it is time to review them and make some changes. Look at which Keywords are struggling. Perhaps change it to a broad match or more specific of a keyword. Make sure that your keywords are relevent to your site and what you are offering so you are not paying for clicks that will not potentially profit you. Find duplicate keywords so that variations of the same keywords are not being used. Use negative keywords so if you are selling glasses for eyes, you aren’t getting people looking for drinking glasses, for example.
Next look at your Ads. Make each ad appeal to a specific part of your business. Pick your keywords well and ensure they relate to your business offerings. Using a heading that is 2-3 words long is much better than using a single word. Make the ad simple, but make it have a call-to-action so that it is enticing to click on. Constantly review and change your ad to see if it yields better results.