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Courtesy: BusinessInsider.com

You probably get them as much as I do: those sales calls from people who can “guarantee top positioning in Google and other search engines”.  Little do they know that when they call me, they’re talking to someone who doesn’t mind showing them just how little they know about search engines and business in general.  Heck, if I can keep them on the phone a couple seconds longer, that’s hopefully someone else saved from hearing their snake oil spiel in the first place.  On one such call, I let the gentlemen finish his whole script and he proceeded on the hard sale.  I asked him one question: “What kind of ROI can I expect to see from your services?”

“Oh, our ROI is AWESOME” was his response.

Um…no it isn’t.  Last time I checked, ROI was a calculation where you take earnings minus cost divided by cost multiplied by 100 to get in percentage terms [((E-C)/C)*100], which I’m pretty sure leads to a number…not AWESOME!  The analysis of how that number meets expected goals may lead to the label of “awesome” and high-fives all around, but ROI itself is simply a number.

If you’re wondering why I’m ranting on this, it’s because this is the perfect example of mixing up the difference of results and the interpretation of the results.  This is critical when it comes to monitoring PPC performance.  You could have a 500% ROI, which some might consider awesome, but what if your break-even point required a 750% ROI compared to other activities you could have done with those resources?  Ladies and Gentlemen, in this case “awesome” has left the building and you have some explaining to do.

Since PPC can be factored down to the penny at a keyword level, don’t consider ROI as a goal, but as a floor to build on.  Look at your daily or weekly reports and ask yourself “Can I be happy with these results if they continued for X amount of time?”  If the answer is no, then you just reviewed the actual results, and interpreted them to be insufficient (aka “not awesome”), regardless of what the actual ROI is.
If you know that to break even after shipping, commissions, taxes, and all other costs that you need a 250% ROI from PPC (or $2.50 ROAS…same thing) then you should set your floor at 250% and not your goal.  Set goals in three forms: Ideal, Expected, and Acceptable.

• Ideal is shooting for the moon and really worthy of being called “Awesome”
• Expected is profitable and sustainable.
• Acceptable is north of break-even but you really want it higher.

This is especially critical if you work with agencies because agencies will ask you what your target is, and if you say 250% they’ll give you as much volume as they can at the 250% to spend as much as they can (assuming their compensation is based on percentage of spend).  So remember…awesome is a goal, not a number.  ROI is a number, and not a goal.  Setting a given ROI as a goal is awesome, so long as you know what your results should be.