With more and more social media platforms now joining the likes of Facebook, Twitter and Google in running ad campaigns it’s becoming increasingly common for you to have to invest to get your message out to a wider audience. Therefore knowing the value of a follower, like or customer and how much you need to spend to get them is a key element to any ad campaign.
Being able to identifying whether any campaign has been a success is as you would suspect hugely important, after all you don’t want to waste valuable marketing budget on something that isn’t working, but whatever the application you’re using the fundamentals are the same.
Before I continue I thought best to clarify a few terms that I’ll be using which you may or may not be familiar with.
Impression – Whenever your advert appears, whether that’s in a paid search result in Google, an advert on Facebook or promotion on twitter it’s referred to as an impression, regardless of whether it is click on or not.
Pay per click – Commonly known as PPC, this refers to a campaign whereby you are charged each time there is an interaction with your advert.
Call to action – With all pieces of marketing there is a call to action, this can be in the form of a “Buy Now” button, a phone number, a website or anything where you are being asked to perform an action.
Know your budget
How much you have to spend on any pay per click (PPC) campaign will be determined by a number of factors specific to each business. What you do with your money and how hard you make it work for you comes down to research, the number of impressions your advert receives and how strong your call to action is.
Know your cost
Google Adwords, Facebook and now Twitter all provide data relating to the estimated cost per click but you will need to keep an eye on the exact cost. If you want to feature prominently in order to increase the number of impressions and subsequent clicks you receive then your cost will increase. Looking for keywords that have lower costs but still offer a high volume of impressions is a good way of keeping your costs down.
Know your cost per sale
Using your analytics you will be able to calculate the number of visitors you need to make a sale, this will be important when identifying the number of clicks you need to receive from your advert.
Know you figures
For this example let’s say your goal is for your advert to achieve £1000 worth of sales.
You have created your campaign and have set up your keywords, it’s estimated that your Cost Per Click is £1.50
You know that on average you make a sale every 15visitors to your site, from this you can calculate your cost per sale for the advert:
£1.50 x 15 = £22.50
Next work out the average sales value, let’s say it was £45.00
Sales target / Average cost per = Number of sales required
£1000 / £45 = 22.2 (you now know you need 23 sales to reach you target)
Knowing that on average you need 15 clicks to get one sale you can work out that you need 345 click to reach your target of 23 sales.
Each of the 345 clicks costs you £1.50 giving you a total cost of £517.50
Number of sales required 23
Number of clicks needed 345
Cost per click £1.50
Total cost £517.50
Being able to identify the cost of each new customer will allow you to get the most out of a PPC campaign. By drilling down further into your analytics you will be able to identify the keywords, phrases and call to actions that work best for you. Future campaigns can then be planned to maximise both your budget and your return on investment.
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