I wanted to pick the collective wisdom of the adwords marketers in this forum. I’m currently running campaigns for certain keywords. Currently, I measure the ROI of a keyword is by subtracting my Stores average order size minus adwords Cost / conv. (1-per-click). The problem is that this does not accurately reflect the ROI for this specific Keyword. Does anyone have a better way of measuring this particular stat?
ROI= Revenue-Cost/Cost or Profit/Cost...... this is the correct formula for ROI and is looked at as a percentage. Depending on what you target ROI, you can use this formula to optimize your keywords efficiently.
I am assuming you have google analytics setup in addition to conversion data. If not, you can tie in google analytics to your conversion reporting and specify your order confirmation page to be one of your analytics "goals". You can also use tracking systems like prosper202 I believe for this by placing teh Prosper 202 pixel on the order confirmation page. Then you can tell your KW ROI via adgroups or whatever metric you like.