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How to Figure ROI on a Facebook Ad (or other PPC Ad)

If you are doing pay per click marketing, Facebook, Google AdWords, Instagram.. whatever – your LEAD gained was not at the cost per click. This is important to pay attention to. Your cost per lead really is total leads divided by total spent. You are paying for all the clicks you earned that did NOT turn into a lead as well. Your cpc (cost per click) might be $1 and your cost per lead could be $40. Must do the math to calculate true return on investment.

Sample Facebook Ad

 

 

 

Example One: Facebook Ad


Total Spend $53.81
Total Click: 164
Total Leads: 6
CPC (Cost Per Click): .33 Cents
Cost per Lead: $8.97
Cost Per Closing will be total spend.
ROI will this AD will be Total Commissions – Total Spend

I personally believe including ALL ad spend from a channel during a particular time frame designed to achieve the same purpose (buyer registration for example) should be figured.

Example: Total Commissions from Facebook Ads – Total Expense from Facebook Ads = True ROI

Because I believe we should include underperforming ads in the mix as well as it’s really the accumaltion of all that = Results.

You might also want to read: How to Create a Facebook Ad with Demographic Targeting

 

EXAMPLE 2: Facebook Ad

On the surface, this ad looks to be perfoming better than the first. It does based on total clicks and low per cost spend. Yet based on capture, it’s actually more expensive as a cost per lead than the first.
Total Spend: $54.69
Total Clicks: 343
Total Leads: 5
CPC: .16 Cents
Cost per Lead: $10.94

Here’s the next step. Figure out probable conversion and ROI. If your cost per lead on an ad is $10 let’s say (Facebook is cheaper than AdWords), and you convert at 1% web lead to close, then out of 100 leads, you would close 1. Those 100 leads would have cost you about $1000 to close one property.
Now take your earnings from that commission (let’s say $4000 for easy math) and subtract by your $1000 ad spend, you’d make a $3000 or a 300% ROI.

On a team, it might be worth only calculating the companies personal commissions rather than the team. Example:
Commission is 4K, buyers agent takes 2K, Team takes 2K. Now you have 2K earnings – 1K spend = 100% ROI. Doubled your money essentially. You can figure in costs per sale from here as well.

Consider a Simple Google Sheet to create formulas and project and track results.

Sample Ad Tracking Sheet

—>>>> The key is to calcuate all your ad spend and ROI per month/quarter/year to get proper results. One great performing ad should not be the basis of your “brag”. Results = TOTAL investments and TOTAL return. 

You might also enjoy: Getting Started with Google AdWords – Pay Per Click Advertising PPC

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