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Google AdWords:
performance formulas


By Michail Dimitriou*


adwords formulas Calculate the performance of an AdWords account with the following formulas. All data must be calculated for the same period.


Conversion Rate

Definition:

The conversion rate is the proportion of visitors who buy a product or a service (for e-commerce website) or who subscribe for something, or in general have completed a goal, successfully.

Formula:

Conversion Rate (CR) % = Conversions * 100Visits



Average revenue per order

Formula:

Average revenue per order = Revenueconversions



Cost Per Action - CPA

Definition:

Cost per Action (CPA) is the amount that the advertiser pays for each specified action (for example an order for e-commerce website)

Formula:

Cost Per Action (CPA) = SpendingConversions



Value Per Conversion

Formula:

Value Per Conversion = Average revenue per orderCost Per Action



Value Per Click - VPC

Definition:

Value per click (VPC) is the expected profit from a current visitor to your website.

Formula:

Value Per Click (VPC) = Value Per Conversion * Conversionsvisits

Tip: Value per Click and Cost per Click rate must be VPC > CPC



Profit

Formula:

Profit = Revenue - ( Cost Per Action * Conversions )



Return On Investment - ROI

Definition:

Return on Investment (ROI) measures the ratio of your profits to your Google AdWords costs.

Formula:

Return On Investment (ROI) % = Profit * 100Spending



Click here to download this handbook in pdf format!


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Google AdWords performance calculator

Here is an excel file that calculates the performance of your Google AdWords account.

Click here to download it!
or see more details


Read more about the Google AdWords service I provide.




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*Michail Dimitriou is Adwords Qualified Individual and is working as digital marketing manager for a private sector company in Thessaloniki, Greece. Also he supports several digital agencies in USA, India and Greece.


20 June 2015
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