Week 8 - Measurement and optimization - Measuring return on investment (ROI)

Hello my friends!

Today I'm going to talk about a calculation that is used in accounting. I'm going to explain a little bit about the ROI - Return on Investment.

Putting your money on Google Ad Words shouldn't be treated as a cost, but actually an investment to reach more costumers and bring higher profits. Calculating the ROI is going to show you the real effect your advertisement efforts have on your business.

The formula for the ROI is:

  (Revenue - Cost of goods sold) / Cost of goods sold

Let's suppose you have a product that costs $50 to produce, and sells it for $100. Using Google Ad Words you sold 5 products, which costed $250, but you got $500. Let's say you spent $100 on Ad Words, for a total cost of $350. Your ROI is:

   ($500 - $350) / $350

    = $150 / $350

    = 42.85%

In this example, you are getting 42.85% return on investment. For every $1 you spend, you get around $1.43 back. 

This calculation is used in all kinds of business and helps you keep on track your investments to reach profit. What Google Ad Words wants is to help you to reach higher profits, and the ROI will give you an idea if it is working for your business, or not.

That's all for today, my friends!

Let me know, if you have some sort of question, and have a great week!

Week 7 - Budgets and bidding - Set a budget for your campaign

Hello my friends!

Today I'm back to explain to you how to set a budget for your campaign! Exactly! Google Ad Words provide you a way you can set a daily budget for your campaigns, which is great and really helpful! This way, you don't have to worry about how much you are going to spend, if you are going to some vacation, or passing through some period that you are not going to check your account that often, for example. Also, you can change it any time you want for any amount or period you think is better! Great news, isn't?

Lets go through the step-by-step then:

1) Decide how much to spend - So, for example if your cost per click average is $0.20, and you would like to get 50 clicks per day. You might set a $10 daily budget, so you don't spend more than what you want to.

2) Set your daily budget - For each campaign you should set a daily budget.

•  Sign in to your AdWords account at https://adwords.google.com.
• Click the Campaigns tab.
• Click + Campaign and select the campaign type you'd like to create:
• "Search Network with Display Select"
• "Search Network only"
• "Display Network only"
• On the "Select campaign settings" page, scroll to the "Budget" section and enter an individual daily budget or use a shared budget.

• Finish (or skip) choosing your other campaign settings and click Save and continue.

3) Change your daily budget at any time

That's all, my friends! Following those steps, you should be fine to set your budget for your campaign. Just remember, each campaign needs its own daily budget!

Let me know if you have some sort of questions, and see you next week!