Are You Calculating Total PPC Campaign Revenue?

The success of most e-commerce pay-per-click (PPC) campaigns is determined by the amount of revenue made and the height of the return on investment (ROI).  Sounds like a no brainer, huh?  Ultimately money talks and if you aren’t seeing your desired results the PPC budget will be cut.  Too often companies only calculate PPC revenue as purchases made from the site.  I’m here to tell you that PPC revenue can be made through other channels, but oftentimes these earnings are not attributed to the PPC campaign, which is a huge mistake!

Think of this notion in terms of AdWords Search Funnels.  Someone may search for “nike shoes” and click the ad.  This person leaves the site without purchasing anything but then searches for “nike running shoes” 2 days later and makes a purchase.  The conversion will be attributed to “nike running shoes,” but the term “nike shoes” was the first click and assisted in this purchase. 

Here are 2 ways that PPC assists in making revenue, but isn’t always recognized.

Visitors Contacting You through the Site

Many sites have conversion and revenue tracking setup for online purchases, but some do not track contact inquiries and phone calls.  Let’s pretend that I am a retailer researching which brand of men’s running shoes I’d like to sell in my store.  I do a search for “men’s running shoes” and see ads show up for several brands, including: Adidas, Nike, New Balance, and Reebok.  Researching each brand, I decide to carry New Balance running shoes in my store.  I email the company and a week later (after several more back and forth emails) I agree to buy $5,000 worth of New Balance product every month for the next 12 months.  That click on the New Balance ad for the term “men’s running shoes” netted the company a revenue of $60,000.

Without digging deeper, this click would be deemed as yielding no revenue.  Though the conversion might be tracked, it would require follow-up on the company’s part to definitively say this email resulted in revenue.  Just because the conversion process is longer in this situation, it doesn’t mean revenue shouldn’t be attributed to the correct source.

Through your analytics program, every form submission and click on an email address can be tracked.  If your analytics and your sales team are aligned then attributing revenue to the right source is simple, but this isn’t always the case.  Additionally, with call tracking software the source can be identified.  Even without call tracking software, it’s good practice to ask callers how they found you.  Not all customers are going to make a purchase at the first touch point.  Some will contact you and won’t purchase through the site (e.g.: via phone) so this revenue needs to be appropriately attributed.

Purchases Made in Person

Let’s take the same example from above, but say I’m looking to buy myself a pair of running shoes.  I do the same search for “men’s running shoes” and see several different ads.  After browsing each site I decide that I really like a specific model New Balance offers.  I’m hesitant to buy online because I don’t know how the shoe will fit so I go to a New Balance store and make my purchase.  The revenue for this pair of shoes is attributed to the retailer.  As far as New Balance is concerned, the click on the ad yielded no revenue.

In all fairness, attributing revenue to the PPC campaign is extremely difficult in this situation.  Aside from asking the consumer how he heard about New Balance (and even then you aren’t guaranteed the true answer) there is no way to attribute the sale to the PPC campaign.  If your site contains a store locator you can see how many visitors use it, but again, this isn’t a definitive means of tracking revenue.  The bottom line in this case is that some consumers who click your PPC ads are more comfortable purchasing in store.  Though it is nearly impossible to calculate an exact revenue, you should always take this notion into account when determining PPC campaign success.

Conclusion

Going the extra step to determine total PPC campaign revenue can be difficult, but it’s absolutely necessary since you want to make sure the PPC campaign gets the credit it deserves. Don’t think just in black and white terms.  You must understand that additional PPC revenue is generated through other channels and at later times.

How do you make sure you are tracking total PPC campaign revenue?  I’d love to hear your thoughts.

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3 Responses to Are You Calculating Total PPC Campaign Revenue?

  1. Hi Matthew,

    You make an excellent point – without accurate conversion attribution it is extremely difficult to gauge the true value of PPC and other online marketing efforts.

    That said, even with the most advanced tracking solution, there will still be people who do research on one computer (work) then purchase on another (home), while the number of people using multiple devices (PC, iPhone, iPad) is only increasing.

    This will lead to an even greater conversion attribution challenge, making PPC ROI measurement even harder.

    Faced with this inevitable difficulty, I think it’s sometimes valuable to look one step back from conversion data, and consider user behaviour, and wrote an article on using online behavioural metrics such as page views, time on site, bounce rate and returning visits instead of conversion data to optimise keywords:

    http://www.calculatemarketing.com/blog/techniques/intelligent-analytics-for-intelligent-adwords-management/

    Although accurate conversion data would be ideal, looking at how people interact with the site can often prove to be highly valuable in assessing and improving PPC performance.

    Cheers,
    Alan

  2. Hi Alan,

    Thanks for the feedback. I certainly agree with looking at user behavior as another indicator of how well a PPC campaign is doing.

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