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i i am new to adwords, need help understanding profit

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# 1
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i am new to adwords, how can i find out the aproximate profit  per click?

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Accepted by John Paul (Google Employee)
September 2015

Re: i i am new to adwords, need help understanding profit

Top Contributor
# 3
Top Contributor
Hi Jim

If your site is an eCommerce site then the reporting is pretty complete within Analytics as Gemma explains - look for the eCommerce reports.

However, if you are looking at lead generation then things become a little more complex and a little less exact!

First, you need to figure out what a client is worth to you. In some cases, such as an accountant, the lifetime value of a client could be quite high. Or a real estate company. For others it may be less identifiable - a newsletter sign up, for example, does have a "value" to you, but it's harder to figure out perhaps.

Once you have a value you can do a couple of things - firstly, input that value into your conversion reporting - so that Google will report that value each time a conversion is triggered. for example, if you decide that a newsletter sign up is worth $5 to you, then each time the conversion triggers, Google add $5 to the tally.

In the reports you can then see how much each conversion cost you, and compare that with how much it is worth.... the difference, or rather, the multiple in percentage terms is your return on investment.

Again, with eCommerce reporting the value of the transaction can be brought through from the shopping cart into the reports - but, beware, Google brings in the value of the sale - so if someone buys a watch worth $1,000 then Google reports a return on investment of $1,000 - it doesn't take into account what YOU paid for the watch in the first place - it is gross income from the transaction, not net.

If you only sell $1,000 watches (or widgets), you can manually tag each conversion (sale) with a value, say, $300 - so that you are recording only your profit on the sale.

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Re: i i am new to adwords, need help understanding profit

Explorer ✭ ✭ ☆
# 2
Explorer ✭ ✭ ☆
This is something you have to work out for yourself, using data from your Adwords account and your own business data.

You need to be able to attribute sales to your Adwords campaigns - Google Analytics can be a big help here, see below. That is to say, you can work out how many sales resulted from your Adwords campaigns. You can then work out how many clicks this needed in order to generate these sales. Then you can work out from your own sales figures how much revenue you generated through Adwords and also how much profit.

I trust that you have Google Analytics coupled to your Adwords account, as this means tracking purchasers' behaviour is much easier (you link to Adwords from your Analytics account - and as you're signed in to Google, it's only a matter of finding your Analytics dashboard).

I'm around if you have any further questions. Enjoy Adwords! It's huge fun when it's all going right.

If you find you're not making a profit, there are a good number of people around here who can help you with specific problems and I can help with the generalities and strategies.
Marked as Best Answer.
Solution
Accepted by John Paul (Google Employee)
September 2015

Re: i i am new to adwords, need help understanding profit

Top Contributor
# 3
Top Contributor
Hi Jim

If your site is an eCommerce site then the reporting is pretty complete within Analytics as Gemma explains - look for the eCommerce reports.

However, if you are looking at lead generation then things become a little more complex and a little less exact!

First, you need to figure out what a client is worth to you. In some cases, such as an accountant, the lifetime value of a client could be quite high. Or a real estate company. For others it may be less identifiable - a newsletter sign up, for example, does have a "value" to you, but it's harder to figure out perhaps.

Once you have a value you can do a couple of things - firstly, input that value into your conversion reporting - so that Google will report that value each time a conversion is triggered. for example, if you decide that a newsletter sign up is worth $5 to you, then each time the conversion triggers, Google add $5 to the tally.

In the reports you can then see how much each conversion cost you, and compare that with how much it is worth.... the difference, or rather, the multiple in percentage terms is your return on investment.

Again, with eCommerce reporting the value of the transaction can be brought through from the shopping cart into the reports - but, beware, Google brings in the value of the sale - so if someone buys a watch worth $1,000 then Google reports a return on investment of $1,000 - it doesn't take into account what YOU paid for the watch in the first place - it is gross income from the transaction, not net.

If you only sell $1,000 watches (or widgets), you can manually tag each conversion (sale) with a value, say, $300 - so that you are recording only your profit on the sale.