Google AdWords:
performance formulas

By Michail Dimitriou*


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 * 100}⁄_Visits

Average revenue per order

Formula:

Average revenue per order = ^Revenue⁄_conversions

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) = ^Spending⁄_Conversions

Value Per Conversion

Formula:

Value Per Conversion = ^{Average revenue per order}⁄_{Cost 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 * Conversions}⁄_visits

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 * 100}⁄_Spending

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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.

*Michail Dimitriou is working in the field of iGaming as a digital marketing executive for an iGaming company in the exotic Malta as well as an SEO freelancer. He supports several advertising companies and digital agencies around the world.
Also he is smart and handsome.


20 June 2015