Let’s take care of the basics first. To be able to use ‘Revenue-per-click’, you will need to have set up goals within Google Analytics (GA) and assigned a value to each goal set up. The value of a goal is the revenue a conversion on that goal brings to you. You can set goal values during the goal set up process or return to the ‘Profile Settings’ page to assign/edit values to existing goals.
Revenue per click is calculated as follows: Goal Value x Conversion Rate.
As such, ‘Revenue-per-click’ (RPC) simply allocates a value to every paid click.
Comparing what you earned per click to your average CPC will give you a quick indication on the profitability of a given keyword. As such, RPC can help you to identify ‘problem’ keywords that may be adversely affecting your campaign.
If you receive 10 clicks on a keyword and 2 goal conversions at £20, your revenue per click is
£20 x 20% = £4
i.e. each click is worth £4.
What does this tell me?
It tells you that if your website keeps converting at 20%, then you break-even at an average CPC of £4 on a conversion of £20 value.
However, if your average CPC for the keyword is £5, then you are spending £1 more for every click than you are earning from it. Therefore, you’ll effectively be making a loss of £1 with every click on your ad.
Conversely, if your average CPC is £3, then you’re making £1 in profit per click.
How to view ‘Revenue-per-click’ reports:
1. Log in to your GA account.
2. From the side navigation panel, select ‘Traffic Sources’, then select AdWordsBeta.
3. Select an option from the sub-menu to look at data in an overview or by campaigns (click on campaign name on the right-hand side to get data for the campaign ad groups), keywords, day parts, etc.
4. From the main view on-screen, select the ‘Clicks’ tab and find the RPC column on the right-hand side in the main view.
How do you make a loss-making keyword profitable?
a) Lower your average CPC. However, do bear in mind that significantly lower ad positions might also affect your conversion rate, thereby negating any potentially positive affect. Hence, we advise that if your average CPC is higher than your RPC, you should try lowering your CPC gradually to find the ‘sweet spot’ which is where your keyword spends less enough per click but still converts at an acceptably high rate to start earning profits for you.
Alternatively, you can try to lower your average CPC by improving your keyword Quality Score. In the earlier example, you were converting on a keyword at 20%, earning £4 per click. If your average CPC on that keyword was £5, you were making a loss of £1 per click. If you can improve the Quality Score of the keyword, you may find that you can reduce your bids without necessarily dropping down to a lower ad position.
b) Improve your site conversion rate. You might do this by testing new landing pages, forms etc.
These methods can be tried alone but it is generally a good idea to try both (together or one-by-one) for best results.
What if I do not have goal conversion values, only target CPAs?
No problem. Just use your target CPAs as goal values in your GA account/profiles. All you have to do is work to break even.
A Word of Warning…
Before undertaking a major optimisation project make sure that you have a representative data set to balance out any peaks/troughs due to external factors.
Also, it is important to bear in mind that availability of granular data like GA makes possible can lead you to create an ‘over-optimised’ campaign that converts at fantastic rates and with low costs, but fails to deliver sufficient volume. A good adwords campaign will strike the balance between driving cost-effective leads/sales and driving volume.