So I have an AdWords campaign with the following numbers:
Total Sales through Ads: 630000 Cost of the goods: 590000 Cost of Advertising: 22500
If I follow AdWords ROI formula, I have a ROI of 2.85%: (Sales – Total Cost)/Total Costs = (630000 – 612500)/612500.
But I understood that ROI was Profit / Investment and that’s how I saw it in many places. Which would be a ROI of 77%: (Profit – Cost of Ads) / Cost of Ads = (40000 – 22500) / 22500
I even saw a formula stating ROI which would be a crazy 2522%: (Revenue – Cost of Ads) / Cost of Ads.: (630000 - 22500)/22500
So if someone asks me for my PPC ROI in AdWords… what should I say? Really confused here. I would like to be the most accurate possible in my answer.