ROI in CPA marketing. Decoding CPO, CPL, CPS, ROAS, ROI and other terms CPO Calculation

As in any professional activity, in Internet marketing, there are a lot of terms and definitions that help specialists quickly focus on work, make calculations and conduct analytics of promotion. For users without experience, many terms are not always obvious, which is why, in our current article we will deciphe the basic definitions and formula of Internet marketers, and tell me where they can and need to be applied.

For your convenience, we divided our article to blocks:

Terms and formulas for calculating costs

Now introduce you to the terms:

CTR (Click-Through Rate) - An indicator of the clicheliness of advertisements. Calculated as the percentage of the number of clicks to the number of ads. Using CTR, the effectiveness of the advertising campaign is determined.

Formula: CTR \u003d (number of clicks / number of hits) * 100%

CPC (cost.per.click.) - The cost that the advertiser pays for click on an advertising announcement with the subsequent transition to the site. CPC helps us evaluate the effectiveness of the advertising campaign, as well as adjust the rates. The CPC indicator affects several factors - the announcement itself, its quality indicator (ST), the show region, time, competitors showing advertising according to the same key phrases.

CPA (cost.per.action) - Cost of action on the website of the advertiser. In this case, the advertiser himself decides that to take for a useful effect. This may be "visiting the page pages" or "sending feedback form". This term can also be detected CPL (cost.per.lEAD)- This is the cost of a potential customer who left his contacts or contacted the advertiser to another convenient way.

For correct tracking of useful actions, you need to set a goal in Google Analytics or another analytics system, where data will be counting.

There are also automatic calculation services CPA indicator - such as, K-50, Roistat, and others.

CPS (cost.pER SALE) - Cost of 1 paid order of goods / services from advertising sources. Cases CPS is convenient for online stores with online payment. For the remaining, a system of through analytics with CRM integration is required. CPS will help you adjust the budgets for advertising, as well as increase its effectiveness.

CPO (COST PER ORDER) - Cost 1 order of goods / services. The difference is that as a rule, all orders are taken into account in CPO, including not paid.

CPM (COST PER MILLENIUM) -the cost per 1000 shows, definition for those advertisers, who is important to convey the advertising message to the end user, while not to focus on the announcement clicks, and pay only every 1000 shows.

Formula:CPM \u003d advertising posting cost / number of alleged contacts * 1000

CPI (COST PER INSTALL) - Cost for installing a mobile application. CAPI Calculation is useful for advertisers whose product is mobile applications. CPI indicator considers the cost of one application installation.

The above terms will help you track the effectiveness of your advertising campaigns, choose the best promotion models for yourself, as well as monitor and adjust the advertising budget.

Terms and formulas for profit calculation

When the costs are counted, the most interesting part comes for each entrepreneur - the arrival count. Below you will find for yourself the formulas and definitions that will be faithful to you.

AD COSTS TO SALES (A / S) - Determination of advertising efficiency. With the help of a simple formula A / S you will be able to calculate the profit from the promoted goods / service less expenses from supporting this product / service. As a rule, the indicator is calculated for the annual period or the reporting period of the company.

Return On Ad Spend (Roas) - The definition that helps us to calculate how many profits you received from advertising campaigns. For example, you received a profit from advertising at 100,000 rubles, while spending 30,000 rubles for advertising. We believe: 100,000/30 000 \u003d 3.3 rubles. You got from each extended 1 ruble for advertising.

Formula: Roas \u003d profit / costs for advertising channels

ROI (Return On Investment) and ROMI (Return on Marketing Investment) differ from the roas size of the cost part. In ROMI (ROI), all costs for marketing are taken into account, not only on advertising channels (for example, website creation, development of new creativity for media advertising, etc.).

Formula: ROMI (ROI) \u003d Profit / Marketing Cost

AD COSTS TO MARGIN (A / M) - Another definition to help assess the profitability of advertising, but not only costs towards profits, and costs in relation to profit, minus the cost of goods / services, that is, net profit from investment.

EPC (Earnings Per Click) - An indicator is similar to the CPC indicator, the difference is that CPC is the cost of clicking, and EPC is a profit with 100 or 1000 clicks.

Formula: EPS \u003d (profit / number of clicks) * 100 (or 1000)

LTV (Lifetime Value) - This is the aggregate profit of the company received from one client for all the time of working with it. The indicator gives a clear understanding of the payback of investments in one attracted client.

Formula: Ltv \u003d income from 1 client for all time cooperation - the cost of attracting and holding the client.

KPI - This is a key indicator that allows you to evaluate the effectiveness of work for achieving goals. KPI is determined individually with a specialist and advertiser, in accordance with the current and desired indicators.

In this article, we tried to tell the most detailed about the main terms and formulas used in Internet marketing, so that you can evaluate the current situation of your advertising campaigns, as well as understand the language of marketing professionals. Highly to you indicators!

See you soon!

ROI is one of the main indicators in the arbitration of traffic, inferior to the importance of the profit only.

After starting the advertising campaign, the ROI is the guide star that behaves a web master to earnings. And on how brightly this star is burning, all further actions of the arbitral fistive depend on: whether it is an increase in revolutions, alteration of creatives, a change of approach or a traffic stop.

ROI in CPA-Marketing is ...

ROI (from the English Return On Investment) is a financial profitability coefficient of investments illustrating the level of profitability or unprofitability of the advertising campaign.

Formula calculation

The ROI indicator is the ratio of the amount profit less than investment in the amount of investment. Usually ROI is expressed as a percentage. The formula looks like this:

ROI \u003d (income - cost) / cost × 100where

• Income is a remuneration accrued in the CPA network based on the results of the advertising campaign;
• Costs are all expenses associated with an advertising campaign.

• The cost of advertising post is 200 rubles.
• The CPA network accrued remuneration for Lida - 500 rubles.

ROI \u003d (500 - 200) / 200 × 100 \u003d 150%

It is important to note that ROI can take values \u200b\u200bin the range from -100% to plus infinity. The negative values \u200b\u200bof the indicator suggest that the remuneration on the results of the advertising campaign turned out to be less costs for her.

For example, if at the cost of post in 200 rubles. We earn only 100 rubles., then the calculation will be like this:

ROI \u003d (100 - 200) / 200 × 100 \u003d -50%

It is immediately clear that as a result, we only beat off half of the investments and were in the minus.

There is also a situation called "merge to zero". It happens when the final income is equal to expenses - spent 200 rubles. and earned 200 rubles.

ROI \u003d (200 - 200) / 200 × 100 \u003d 0%

Although in a solid currency, at least a percentage of the profit will in this case be zero.

The most terrible thing that can happen is to merge all the money "in dumplings", without receiving anything for his works, except for invaluable experience.

ROI \u003d (0 - 200) / 200 × 100 \u003d -100%

ROI will take its smallest negative value - -100%.

For nervous persons - this is a great reason to fall into depression and forever forget about the traffic arbitration, and for experienced adverds - only an incentive to cheat carefully, take a rag in hand, analyze the result, eliminate the cause of failure and pour further, but already in Plus.

For clarity, I duplicate all the options together:

What affects ROI

Everything. Yes, yes, I'm not kidding.

Understand, ROI is the final result of the whole work you have done, so each item in a long drain chain inevitably has its influence on it:

• selected CPA network;
• attractive creative;
• landing load speed;
• opening time of the advertising campaign;
• mood of call center employees;
• and so on and so forth.

It follows the obvious conclusion that it is also possible to increase the size of the ROI, too, one hundred and one way:

• choose a CPA network with big deductions or better aprage;
• test new creatives;
• copy Landing to your quick hosting and adapt it to mobile devices;
• disable advertising in the "Dead" for offper time ...

That is, it is essentially completely ordinary for arbitration things, but better than yesterday, and get the profit tomorrow more than today.

How else to raise ROI

I will share our freight tricks to optimize advertising campaigns - in one of the following articles - in the meantime, the site, which is guaranteed to increase your ROI by 5-15%, depending on which source of traffic you are currently working.

The service is a real "budget economy", which allows you to replenish the offices of advertising networks with advantage of up to 20%.

The list of sources includes such "Monsters" as VKontakte, MyTarget, Markewgid, Direct / Advert, Kadam, Recreativ, Bodyclick, Getdirect and Airpush, so today you can register with the service and start buying your favorite traffic with a pleasant discount.

Excel Almighty

Over time, you will definitely learn how to quickly estimate the ROI in your mind, but in order to collect accurate statistics, you still need some analytical tool, for example, Excel or any of its analog.

YouTube videos will tell you in detail about the Aza use of this application, and I just show how the formula should look like in the ROI Calculation Cell.

What kind of ROI consider the norm

The title is a bit provocative, because there is no norm here and can not be. Some arbitralists are quite satisfied with ROI at 20-30%, and someone works exclusively on bundles with ROI from 100%.

The devil lies in the volumes.

On small circulation, working with the small ROI "boring" and is dangerous, because the earnings are small, and any change as a traffic can make a minus.

With a big budget, on the contrary, you can afford the luxury of pouring traffic on the principle "if only in a plus", and the companies stop at the mark just above the zero.

That's how it looks in practice ...

Despite the fact that ROI in the second version is five times smaller, the actual profit turned out to be twice as much. That is why adverds prefer to work on large volumes with mass offends - on a wide geo and a large target audience.

But what about this is the dry statistics ...

When stopping traffic

It would seem that the answer is obvious: if today it goes in a plus, but it is already clear that tomorrow will be in minus, then it's time to stop.

Under the "today" and "Tomorrow" can be understood as an hour, day or week, that is, that time interval through which you are viewing and analyzing the statistics.

But I would like to remind you that you should not even wait until the latter, since minus can actually die imperceptibly and attack a little earlier than ROI will cross the zero mark.

This is because when analyzing the statistical data of a web master, as a rule, only expenses for traffic from advertising sites, ignoring additional ligament costs, such as domain registration, tracker rental, fee for the withdrawal of funds to the bank card and so Further on the list.

As a result, you can observe a similar picture ...

The first advert took into account all the costs and has already stopped traffic, because I saw that the bundle was going to go in minus.

The second adverf in the blissful ignorance continues to pour with the virtual ROI 11% and receive "fabulous profits".

This is, of course, an exaggerated example, and there are many nuances, about which neither in a fairy tale, no pen describe, but the main thing is that you caught the essence and do not forget about additional overhead costs.

Of course, if you constantly pour on decent volumes with ROI from 500%, it is not worried about such trifles, but something tells me that it is not so ...

How "Right" consider ROI in arbitration

Specially left this topic for a snack so that from the very beginning it is not to create a suck in my head.

Unfortunately, it has so historically developed that the arbitral community has not yet developed a single - "canonical" - the formula for the calculation of ROI. And there are also serious forum wars around this topic, in which there are no rightful, nor to blame.

And the problem is as follows, - part of the arbitrals calculate the ROI is not so ...

ROI \u003d (income - cost) / cost × 100,

as I showed you, and a little different:

ROI \u003d Income / Costs × 100.

As a result of a small change in the formula, the range of values \u200b\u200bcan be shifted, which can receive ROI - it becomes from 0% to plus infinity. That is, even during the discharge of traffic in minus ROI, it is expressed in a positive number, but less than 100%, and when plum in plus is more than 100%.

So both methods of calculation look in comparison on the same examples ...

My opinion on this issue is unshakably for many years and is based on the convenience. If I lose money, I want to see the result with a minus sign simply because I am so much easier to analyze me.

Of course, I do not forbid you to use the second option, but do not forget to indicate 101% in your "megacity" cases with ROI, in what formula you have considered all this.

And even more so, it is not necessary with the persistence of a religious fanatics to prove to someone the correctness of its method of calculation based on the formula from Wikipedia. Be easier, and the profit will dare to you yourself.

Actually

But I still allow myself a little prank with the rights of the author of the article and I will try to reinforce the correctness of my choice by social evidence.

Before publishing the material, I specifically arranged a small survey among the arbents on this topic and received this result ...

Performance Marketing implies a clear and measurable assessment of all advertising activities. Mainly, experts use several metrics that clearly show the effectiveness of advertising campaigns: CPA (price per action), CPO (order value), DRD (share of advertising expenses) and ROI (return on investment). Each of the indicators is useful in work and, of course, has its pros and cons.

Key metrics can be calculated according to the generally accepted formulas:

CPA (COST PER ACTION) - the cost of target action.

CPO (COST PER ORDER) - Order Cost

DRR (share of advertising expenses)

ROI (RETURN OF INVESTMENT) - Return of investment

Special attention deserves an indicator of the DRR, which takes particular popularity in Russian marketing. This metric is similar to the ROI and shows the ratio of all costs and money obtained from advertising. Since the DRR directly affects the real turnover and provides the most objective assessment of efficiency.

Let's look at the example

During the reporting period, the organization has invested in advertising 10,000 rubles: in addition to the budget, the rejection in this amount was the creation of creatives and setting up an advertising campaign. From attracted clients, the organization received 30,000 rubles profits.

DrR \u003d (10 000/30 000) * 100% \u003d 33%

However, in real life, the calculation of the DRD complex and labor-intensive process. It is required to take into account all spending and income that can actually have a lot: all orders from the site, buying in offline store, calls, design, design, payment for specialist services, the cost of special events and advertising setting. Services that are integrated with web analytics systems - Google Analytics, Yandex.Metrica, and also take into account the data of call tracking services. In our agency, the Platform of the "Statistics" and "Optimizer" is used for these purposes. The system controls the course of advertising campaigns, evaluates the quality of work at once across multiple channels, analyzes the trafficer received.

KPI is a quantitative assessment of the quality of work performed. Metrics should reflect the effectiveness of the advertising campaign in exact numbers and maintain a further promotion strategy. Monitoring key indicators helps business achieve set goals in advertising and sales.