PPC Calculator
What is PPC?
Pay-per-click (PPC) is an advertising model where you pay a fee to the host each time your ad is clicked. The host could be a search engine, social media platform or other websites and apps. Understanding your PPC performance can help you to measure the amount you are spending to acquire a customer and allows you to take data-driven decisions about your PPC advertising efforts.
Relevant channels: Google Ads, Bing Ads, Facebook Ads, LinkedIn Ads, Instagram Ads.
How to use this PPC calculator
To calculate your PPC performance, enter your projected monthly ad spend, expected cost-per-click (CPC), target conversion rate, lead to customer rate, and average sales price. The calculator will instantly calculate your PPC performance as a percentage, giving you insights about the overall performance of your PPC campaigns.
PPC formula
PPC performance = ((Total Revenue - Projected Monthly Spend) / Projected Monthly Spend) × 100
The above formula takes into account multiple variables. Here, the total revenue is calculated as follows:
Total Clicks = Projected Monthly Spend / Expected CPC
Total Conversions = Total Clicks × (Target Conversion Rate / 100)
Total Customers = Total Conversions × (Lead to Customer Rate / 100)
Total Revenue = Total Customers × Average Sales Price
Understanding the PPC result
The ideal PPC result will vary based on your industry, product, business goals, advertising host etc. Typically:
- A high PPC percentage indicates that your PPC ad campaigns are generating high revenue when compared to the amount you are spending. The higher your PPC percentage, the better is your performance.
- A low PPC percentage signals that your PPC campaigns are not providing the expected returns and that you need to optimize your targeting, ad copy or bid strategy.
When to calculate PPC performance
Here are some key scenarios when you should calculate your PPC performance:
- To assess the profitability of new campaigns
- After making changes to ad copy, targeting, or bidding strategy
- To determine if your campaigns are ready for scaling
- While comparing different PPC platforms or ad formats
- To monitor the ongoing performance of your campaigns
How to calculate PPC (with example)
Let’s say you have a projected monthly spend of $10,000, expected CPC of $2, a target conversion rate of 5%, a lead to customer rate of 20%, and an average sales price of $500. Your PPC percentage can be calculated as follows:
PPC performance = ((Total Revenue - Projected Monthly Spend) / Projected Monthly Spend) × 100
PPC performance = ((25,000-10,000)/10,000) x 100 = 150%
Here,
Total Clicks = 10,000 / 2 = 5,000 clicks
Total Conversions = 5,000 × (5 / 100) = 250 conversions
Total Customers = 250 × (20 / 100) = 50 customers
Total Revenue = 50 × 500 = $25,000
In this example, your PPC performance is 150%, which means that your campaign generated 1.5x the revenue of your monthly spend.
How to improve your PPC performance
- Optimize your keyword selection to reduce unnecessary ad spend
- Improve your ad copy to increase click-through rates (CTR)
- Test landing pages for higher conversion rates
- Adjust bidding strategies to maximize return on investment (ROI)
- Monitor and refine targeting for better audience alignment
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