Quote for the week: Math Sucks!
Learning how to use Google AdWords could be an entire class unto itself. It has its own vocabulary that a person needs to learn. Some are a little more self-explanatory than others, but still a person needs to know what to do with them as well. There are words like, Campaign, Group and Keywords. And then there is Ads, Impressions and Clicks. Eventually those all become clear as a person creates their ad campaigns and divides them into groups.
But THEN we learn about conversions. Now getting the math formula down for a conversion’s ROI (return on investment) was tough on my little brain. Essentially it is this:
(Sales – Production Costs + AdWords Cost) / Production cost + AdWords Cost
I did not understand that at first and so my calculations came off wrong. But now I got it. But don’t understand it . . .
I have made one sale of $30 and my ad cost has thus far been $18.60 soooo
(30 – 18.60)/ 18.60 = .61
That means 61% return on my investment ? ? ?
Which is calculated correctly. But it seems to me I really just made 30 – 18.6. And if I continue to have sales at the same rate (I happen to have gotten 30 clicks on this group ad) I would count Goggle AdWords as a near success, but I am losing money. I would want to make adjustments to my campaigns to increase clicks and get more conversions by making my landing page more appealing. Another option would of course be to raise my rates to be in line with other editors so in that case a sale would be $100- $150. But my goal is to help those with less financial options available.
For this class I am taking I have put in $100 so at this rate of conversion I can hope to get five sales — 150 – 100 = 50.00 Not good at all.
From the info page in Google it says – “If your business generates leads, the cost of goods sold is just your advertising costs, and your revenue is the amount you make on a typical lead. For example, if you typically make 1 sale for every 10 leads, and your typical sale is $20, then each lead generates $2 in revenue on average. The amount it costs you to get a lead is known as cost per acquisition.”
I have to conclude that Facebook may be a better option for getting leads. Nevertheless it has been quite the education learning how to use these tools.