Return on investment, also known as ROI, is a critical factor in any advertising campaign, or any business venture for that matter. Very simply, it is how much profit you will make from how much money you spend (invest). So if you spend $100 on a Google campaign and make $500, and your product cost $150 (in this example, this means you made a gross profit of $350), you made $250 in net profit. So theoretically, for every dollar you spend on Google ad you make $2.50 in net profit. This is a positive ROI, and as long as your ROI is positive the more money you spend, theoretically, the more net profit you will make. Conversion Rate is the percentage of people that actually become customers from your website, compared to the people that just look at your website. If you had 100 people look at your website (from ads they clicked on), and 3 people purchased your goods or services, you have a conversion rate of 3%. It sometimes can be much easier to increase your conversion rate that it can be to increase your clicks and traffic to the site.
For example, if
- You had 100 people come to the site and have a conversion rate of 1%, that means one person out of every 100 that in your site actually bought something.
- Let’s say you make gross profit of $500 from each sale, it cost you $100 in Google advertising to get those 100 people to come there and advertising costs.
- Let’s say that you made $400 in net profit from the one person that bought something.
- So you have a conversion rate of 1% and ROI of 400%.
- Now let’s say that we increase your conversion rate to 2%. Now you made a gross profit of $900, after you paint your hundred dollars in Google advertising, space and now have an ROI of 900% by simply doubling your conversion rate from 1 to 2%.
How Metheney Consulting Can Help
- Improve your landing page to make it more sales oriented, or increase the viewers curiosity, or induce them into action. This can be done through user-friendliness, easy navigation, marketing and graphics design, text development, and calls to action.
- Improve the quality of your ad writing to increase the viewers likelihood of buying.
- Work with you to improve your offer, to increase the likelihood of a sale. For example, if someone clicked on a Google ad and it takes them to a special landing page that gives them 20% off a one time purchase, that still gives you a gross profit of $800 and a net profit of $700 after you pay for your Google advertising or a 700% ROI on your ad investment. Plus, you have established a customer that may be a repeat customer at 100% price. You have increased your conversion rate by 175% for the exact same expenditure in Google advertising, going from a 400% ROI to a 700% ROI.
To increase traffic to your web site, increase your revenue from your Internet marketing, or even have a more effective web site designed and developed for you, contact at .
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