Thursday, 4 April 2013

Refined Max CPC: Where Client has CPA target Return On Invesment

Some of my clients do not have a target set up in terms of CPA but in terms of ROI (return on investment) to work out Max CPC in these cases it is simply a case of taking Revenue, dividing by clicks and multiplying by the desired ROI.

Max CPC = (Revenue / Clicks) * Desired ROI

So let us run through an example; Widgets sell for £10 and ABC Limted have sold 10 Widgets in an Ad Group that has generated 50 clicks they want to work on an ROI of 15%.

A. So £100/50 = 2 (revenue / clicks)

B. 2 * 0.15 = £0.30 (Result A * ROI)

C. Max CPC = £0.30

In effect the result of A is the amount generated from each click.