Anne–marie’s Business Goal Is to Generate Online Sales of Her Handmade Purses. Her Google Ads Costs Are $100 per Week and She Wants to Know if Her Advertising Investment Is Paying Off. What Additional Information Do You Need in Order to Calculate Her Return on Investment (roi)?

Anne–Marie’s business goal is to generate online sales of her handmade purses. Her Google Ads costs are $100 per week and she wants to know if her advertising investment is paying off. What additional information do you need in order to calculate her return on investment (ROI)?

  • How many times her ads have been viewed and clicked on
  • Number of clicks on her ads and costs to produce her purses
  • Costs to produce her purses and revenue generated from her ads
  • Number of clicks on her ads and revenue they generated

Right Answer:

  • Costs to produce her purses and revenue generated from her ads

Explanation:

As the question itself explains, Return On Investment is a mathematical figure where you have to calculate how much revenue you generated in a proportional manner. The mathematical formula for Return On Investment is as follows:

ROI = (Revenue generated – (the cost of goods sold + the cost of the ads) / cost of goods sold + the cost of the ads

The formula is almost identical to that of the profit ratio in profit and loss.

As far as Google Advertisements are concerned, Return On Investment depends on quite a few factors:

  • The cost to run Ads
  • The cost to produce the goods or implement the services
  • Revenue generated at the end of everything

It is absolutely understandable that you want to be in a positive result no matter what. Having spent a lot on the production and the promotion of the product or service, there is no point if you are not ending with any sort of profit. So, to have that, advertisers focus on Target CPA or Target Cost per Acquisition.

When the advertisers invest a lot on advertisements, they would want the ads to get converted as well as simultaneously reach the relevant people possible in order to get the best results out of it. Thus, it helps the advertisers to increase on the Return on Investment significantly.

Do you got queries regarding this question Anne–marie’s Business Goal Is to Generate Online Sales of Her…then do let us know by leaving a comment in here.

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