How To Calculate Your ROI on Ads
Thinking about running ads on Facebook or Google and wondering how to track your ROI? It’s actually simple to do the math on that investment. The hard part is getting the right figures and the right tracking set up so you can get a clear picture of the investment.
How Are You Tracking Ads for ROI?
First things first: How are you tracking the work thats done with your ads online? This is by far the most important foundation you’ll need to have figured out before beginning to track your ROI on ad spend. This post is about getting to the nitty gritty of ROI … not about how to track the ads. So I will send you to some great videos and links below for Google and Facebook tracking for your own research.
Facebook Pixels For Ad Tracking
Facebook pixels (once installed on your website) will allow you to target the audience that is most likely to engagement with your company. You can do this by way of running ads to those website visitors or simply track conversions. It’s really how you robust or simple you want to take the information.
You can read more about pixel benefits and how to create one here: Facebook pixels start here
Google and Google AdWord Tracking
I can’t give you better information than Google themselves on this subject! So here is the video about conversion tracking and the link to all the juice information is provided below the video.
Find out more from Google support here: Google Adword Tracking
How To Calculate ROI of Ads
Here is the ROI Ad Formula: ROI = (Revenue* – Amount Spent) ÷ Amount Spent
You can take that amount spent x 100% to get your percentage
How do you figure out your revenue? Take the amount you made in conversions (see, this is why you need tracking – to get the actual conversions from just that ad) x your product sale price.
*Sale price x your conversions = Revenue
Once you have your revenue amount the above formula should work well. This will help you determine the percentage of sales from this channel of advertising.
We hope that helps demystify how to figure out your advertising budget!