ROI calculation

[jacnixon]

Hi

I've been asked to comment on account using only the following data:

The average value order = £1500
monthly budget £20,000
CPC £0.70
CPA £20.00

Bounce rate 55%
Avg time spent on site 2.4 mins
Avg page views 3.7

From the above I thought I would work out the ROI

assuming monthly budget spent conversions = £20,000/£20.00 = 1000
Revenue = 1000 x £1,500 = £1,500,000

Thus, ROI calc (revenue - cost)/cost
= (1,500,000 x 20,000)/20,000
=74

Is this right?

Other comments
- 55% bounce rate - I thought this was quite low for a ppc landing page
- the average page views seem very high - any comments?

 

[fisicx]

You haven't taken into account the profit on each sale.

If each sale only generates £100 profit and you sell 200/month then your ROI is zero.

And the bounce rate is only high if the visitors don't convert. Because PPC is often very targetted you would expect the visitor to land on a PPC optimised page with a high expectation of conversion.

 

[Call Tracker]

are they after cost per lead as in we have spent £x on google adwords and this is how many leads we have received therefore it has cost us £x to generate each lead?

 

[jacnixon]

are they after cost per lead as in we have spent £x on google adwords and this is how many leads we have received therefore it has cost us £x to generate each lead?

this is already given - see CPA [cost per acquisition] which is basically the same

 

[jacnixon]

Is there anything else I can prove with these figures?

 

[Duncan_W]

Fisicx is right, you need to know the Margin on the sale to generate any meaningful figures.

This said, assuming CPA = Cost per order, and the average order value is £1500, then I would say that if spending £20 on Marketing to generate a £1500 order is not worth while then their margins are so low that they should probably not be in business