When running a PPC advertising campaign or Google Ads, you do need to ensure that KPIs are in place from the start, in fact, when I think about and design my ad copy and campaign, I do so with the KPIs in mind, and this all comes from, the marketing and business plan that you would want to put together before you start creating any brand awareness campaigns.
Your KPIs should be derived from what you need to succeed. What is your basket value? How much money are you spending on PPC ads? And what would you like in return on investment?
Profit Margin Formula to Work Out KPI’s
I like to create these in an Excel spreadsheet so that I can monitor the success and profit margin formula.
To start with, I will investigate what is needed for breakeven; once I know I haven’t lost any money with my campaign, I can then look into how to optimise to make as much company profit and total revenue as possible.
The below table is a live table that I am working on as we speak.
| Sales | Value | Average Order | Traffic | Conv Rate | |
| Jul | 63 | £1,875 | £30 | 3,750 | 1.68% |
| Aug | 63 | £1,875 | £30 | 3,750 | 1.68% |
| Sep | 63 | £1,875 | £30 | 3,750 | 1.68% |
| Oct | 63 | £1,875 | £30 | 3,750 | 1.68% |
| Nov | 63 | £1,875 | £30 | 3,750 | 1.68% |
| Dec | 63 | £1,875 | £30 | 3,750 | 1.68% |
This is a very simple guide, but there is some maths behind these equations. And other things that you need to know.
My budget for this PPC campaign is £750 per month, and I have a profit margin of 40% at the basket value of £30. Therefore, to get to break even (after the cost of sale) I would need to make £1,875, and at a basket value of £30, this would mean that I would need to make 63 product sales from that budget of £750.
I know that the rough cost-per-click for the product that I am looking to sell is around 50p, so if I have a budget of £750, then this will drive me 3,750 visitors per month to my client’s landing pages or results page.
Therefore, if I have 3,750 visitors to the site, and I need to make 63 sales to BREAK EVEN, then I would need 1.68% of these to convert. There you go, there is your main KPI for a quality score.
Basket Value, Cost-Per-Click, Number of Sales etc you cannot really do much about, they are in most cases out of your hands, BUT if you can make sure that your website is converting at above 1.68%, then you know you will always be in the red, making money, or at least not losing money.
I like to KPI my campaigns this way; you can have hundreds, but the more you have, the more you need to work on, so less time that you have on each KPI, meaning that you are not going to make as much profit.
To increase the conversion rate, expressed as a percentage, and net income you need to optimise the campaign as discussed in the previous section.