Google AdWords is Google’s advertising system in which advertisers bid on certain keywords in order for their clickable ads to appear in Google’s search results. Since advertisers have to pay for these clicks, this is how Google makesmoney from search.
Here are the some adwords formulas that are helpful for you to measure the ROI and Cost through ad words.
#1 CTR(Click through rate) = Clicks/Impressions X 100
#2 CPM = Cost/1000 impressions
#3 CPA= Total cost(per acquisition)/total no. of leads
#4 Conversion rate = Conversion/Clicks
#5 Total cost = Click * CPC
#6 Adrank = CPC * (Quality Score + Ad-Extension)
#7 Quality Score = depends on – CTR, Landing page, Ad relevance
#8 Actual QS = Sum( (sum of QS * impression)/ sum of impressions)
#9 Actual CPC = (Ad rank below competitor/Quality Score of your) +0.01
#10 ROAS (Return on ad spend) = Revenue(or conversion value)/ad spends
#11 ROI = (Conversion- cost)/cost of ad spend
#12 Cost = conversion rate * profit margin
#13 Max CPC = (Avg Conversion Value/desired ROAS)*conversion rate
or
#14 Max CPC = (total conversion/clicks)/desired ROAS
#15 Ad CTR = Clicks / Ad impressions
#16 Ad request CTR = Clicks / Ad requests
#17 Ad request RPM = (Estimated earnings / Number of ad requests) * 1000
#18 Ad RPM = (Estimated earnings / Ad impressions) * 1000
#19 CTR = Clicks / Impressions
#20 Coverage = (Ad requests that returned ads / total ad requests) * 100
#21 Delivery rate = Ad impressions / Ad requests
#22 Drop-off rate = Number of impressions / Matched requests *100
#23 Impression RPM = (Estimated earnings / Impressions) * 1000
#24 Page CTR = Clicks / Page views
#25 Page RPM = (Estimated earnings / Number of page views) * 1000
#26 Query CTR = Clicks / Queries
#27 Query RPM = (Estimated earnings / Number of queries) * 1000
#28 RPM = (Estimated earnings / Number of page views) * 1000
#29 TrueView VTR = TrueView Views / TrueView ad impressions
#30 Conversion ratio = No of conversions/ No of clicks*100
#31 CPA = Total spent/ Total conversions
#32 CR = Total conversions/ Total clicks*100
#33 ROI = Revenue – Cost/ Investment Cost*100
#34 TROAS = Value of the product/ Converted click cost*100
#35 ACPC = Ad rank of the person below you/ Your quality score + $0.01
There are a lot of new features google has added in their adwords including the new interface, and adwords name changed from Google Adwords to Google Ads but these formulas remains same..
