Determine your target CPC using our ROAS Calculator
ROAS Calculator Steps:
- Log into your analytics platform (Google Analytics, Site Catalyst, etc) and find your current ecommerce Conversion Rate and Average Order Value for Paid Search. Enter values in the tool.
- Now, select your Target ROAS (Return on Ad Spend). This is the amount of Revenue that you expect to receive for every Ad dollar spent on PPC.
- Once you’ve completed this, hit “Calculate” button to find the target CPC that you’ll need to average.
- Now compare the resulting CPC target to the average CPC’s for your top keywords.
Note: that for every keyword, there will be a different conversion rate and average order value. This is why we speak in averages for now. At scale, your bid management platform and PPC manager should be optmizing at the keyword level, based on the value of each keyword. This tool gives you a very high level target for CPC, but in practice each keyword could have it’s own target CPC based on its respective value. For now, use this information directionally to understand how competitive you can be at given ROAS targets. Another exercise can be to adjust the Conversion Rate and Average Order Value values to see what kind of improvements might be needed to achieve certain ROAS goals.
For more information about the formulas used in this calculator, read our post on the “3 Most Important PPC Metrics”