Google completes ROI tips

2 October 2007

An Inside AdWords blog post from Google completes the three-part series on return on investment (ROI) from the search engine.

The latest advice covers the recommended response to an ROI of greater than or less than 100 per cent.

While a figure above 100 per cent indicates profitability, AdWords product evangelist Fred Vallaeys suggests that action could still be taken to optimise expenditure.

"By increasing your bid, your ROI will decrease but you may end up making a greater total profit," he explains.

This is "because you're getting more clicks when your ad moves to a higher average position".

Meanwhile, where the ROI is less than the amount spent on the advertisement, Mr Vallaeys notes that the maximum bid should not necessarily be reduced.

He urges marketers to consider the lifetime value they gain from each customer, rather than the initial profit they make from each conversion.

Previous advice from Mr Vallaeys included setting a fixed conversion price for transactions where the cost of the product does not change, in order to allow the AdWords software to calculate ROI automatically.

Category: Paid search