How to calculate profit before starting any digital marketing ads?
Digital marketing became the most measurable tool on the market. Still, most companies are launching their ads without any digital marketing analysis. Let’s reveal how to calculate your profitability:
Google Ads Search:
You need to collect the whole semantic core (list of keywords for your business) with the statistics about the search volume, competition, and bids. Use Google Keywords Planner. Then you need to delete all irrelevant, informational, and other non-conversional keywords. Using low range and high range bids from the list you can calculate the average bid for your market. Knowing an average website conversion rate in your industry (ex.: 1/12, 1/15, 1/20) and multiplying it with your bid you will get the average cost per lead. Finally, use your sales conversion rate to calculate the cost per purchase and the potential profitability.
It’s not so simple to calculate profit with Facebook and Instagram ads. You need to prepare your target audience segments first. Using your segments and daily budget you can get the data from Facebook about potential customer reach (market volume), daily reach (potential customers reached per day), cost per click, and the number of clicks within your budget. The issue is that Facebook is calculating daily link clicks using an average CTR for chosen audiences. When using Facebook you’re paying for audience coverage, not for the clicks, i.e. you can get both 10 and 100 clicks from 1000 impressions with the same budget. To have a high CTR and conversion rate you need to have attractive video creative that will provoke willing emotions. Take into account that the average conversion rate of Facebook/Instagram ads is lower (1/30, 1/40, 1/50) because you’re reaching clients that were not thinking about purchasing your products/services.
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Search engine marketing is based on search engines on the Internet and has two main pillars: improving the visibility of the website or/and paying to advertise (with Google Ads).