When it comes down to Search Marketing, your clients are probably all about return on investment- and rightfully so. Several of my clients are concerned about their ROI and measure what is essentially the same statistic, but with a different name. Some prefer ROI, and some prefer A/S (Advertising Spend/Sales Revenue), and some just prefer the net profit dollar amount to increase. While they are all measuring the same thing essentially, A/S is probably the easiest metric to use when determining how to optimize your PPC campaigns to meet specific ROI needs.

Let’s say that your client, Fred’s Deli Meats, has an ROI goal of 300%. This means that for every $1 Fred spends, he will be putting $3 back in his pocket. So what is this as an A/S? $1 Ad Spend / $4 Revenue = 25%. So Fred needs his PPC efforts to run at a 25% A/S.

Now let’s look at how the keywords within his campaigns are performing. All of the keywords in an ad group are running at the same Max CPC (cost per click). You notice that Italian Salami is brining in a ton of clicks, but rarely ever resulting in a sale, while Roast Beef has a 5 to 1 (or 20%) conversion rate. What do we do with these 2 keywords? We know that Italian Salami is primarily spending campaign budget without yielding any sales, therefor limiting the ability for Roast Beef to convert. So, we want to make sure that Italian Sausage’s A/S never rises above the 25% threshold.

To ensure this, we will apply this simple formula (RPC - Revenue Per Click):

RPC * (25% + standard percentage difference in Average CPC and MAX CPC Bid) = MAX CPC

This will ensure that your non-performing keywords will perform at an acceptable A/S level while allowing the best performing keywords to excel.