Pay Per Click Advertising from the point of view of bookkeeping is no different then any other type of advertising. By Understanding your metrics you will be able to determine if Pay Per Click Advertising is right for.
1 – Conversion Rate
The Conversion rate is the number of Visitors who actually make a sale. If you have 100 Visitors and make 3 sales then your Conversion Rate is 3 Percent. Often you need to take a best guess at your conversion rate until you actually run some PPC. A 3 Percent Conversion rate is fairly conservative for most good Pay Per Click Campaigns.
2 – Return on Ad Spend
Return on Ad Spend is a measure of How Many dollars you take in versus how much you spend on advertising. If you spend $1,000 on Advertising and take in $50,000 then your Return on Ad Spend equals 5,000 Percent. (You can use the online Return on Ad Spend Calculator searchmarketing.yahoo.com/rc/srch/tools/roasc.php)
3 – Return on Investment
Return on Investment is the bottom line. Also known as profit or Net Profit. This is the number that all Business owners shoot for. If you spend $1,000 to generate $50,000 in Sales and you make a 50 Percent Profit on each sale ($25,000) the your return on Investment is 2500 Percent. If your profit per sale is only 10% then Profits is only $5,000 and your return on investment is 500% (You Can use the Online ROI Calculator searchmarketing.yahoo.com/rc/srch/tools/roic.php)
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