What is the Metric?
(Revenue minus ad spend) divided by ad spend.
Why Should You Care?
The goal of every advertising dollar you spend is to earn a healthy return on investment or “ROI”.
That’s why you should measure your Advertising ROI in Total as well as by each significant advertising source you use.
In assessing your Advertising ROI be sure to consider Lifetime Customer Value, advertising dollars accumulated now could reap sales and profits later.
What Can You Do To Positively Effect This Metric?
One of the main contributing factor in increasing your advertising ROI is the success of your ads. Creating an ad that has a higher click through rate means that you have to advertise less to get the same result if your click through rate was lower. Thus we can determine that advertising ROI and ad “Click Through Rate” can go hand in hand in terms of success.
Improving your landing page (the page visitors come to once they click your ad) can also significantly effect Advertising ROI. Consider changing everything from the headlines and copy used on the page to the colors and images.
Ultimately you have to formulate what would immediately get people’s attention, and create an ad that stands out and peaks curiosity. You want to make people feel obliged to click in fear of missing out on a sale or opportunity.