We’re exploring metrics again this week, but now we’re taking a look at how to accurately calculate your return on investment. In order to fully understand your revenue stream, you need to know the right way to deduct ad spend and fees, along with a host of other financial details. The bottom line is your return on investment, or ROI.
Take a look at your ad spend in relation to the income it’s producing. I took a look at one client’s and found he spent $100,000 and only got back $25,000. That’s income, not profit! He’d have been better off if I’d taken the money from him and just turned around and given him half back. So instead of just trusting that your ad products are working, you need to measure the return results.
So what ads are working for retailers right now? Some of the more effective ones we’re seeing are coming from Google. Dynamic search ads are giving really great results, and smart shopping is really great, too. Also good are the brand campaigns where users see a connection with the brand, making it more likely they’ll click or convert and hopefully become lifelong brand followers.
Some of these ads are showing extraordinary returns. Seriously, 3,000-5,000% isn’t unheard of. A lot of times that comes from selling a well-known brand, creating double the trust and making them convert higher.
These aren’t small spends, and they may take away a little from organic, but as long as your revenue is increasing, who cares where it’s coming from in the long run? So that’s my point.
This article originally published on stewartmedia.com.au.