Pay Per Click(PPC) and Business Formulas

Pay Per Click(PPC) and Business Formulas

PPC Models:

CPM-model most effective for branding
PPC and PPA models most effective for driving traffic to the site and gaining conversions

Pay Per Click Formulas

CTR=(clicks/impr)*100
Conversion Rate=(conversions/clicks)*100
CPC=Total cost/clicks

Business formulas and parameters

Key Performance Indicators (KPIs) : Effectively measure your KPIs through your analytics tracking

ROI=(Gain from investment-Cost of investment)/Cost of investment

Profit = Sales - Ad spend - Expenses
ROI = Profit / Ad spend


Parameters required to calculate PPC ROI:

Total monthly clicks from PPC engine
Estimated average CPC:
Conversion rate:
Average profit per conversion:


Can Calculate:
Monthly Campaign cost =
Number of conversions from traffic=
Projected profit from traffic =
PPC ROI =


Highest ROI does not always mean biggest profit/return.