Part 1: How to Calculate Your Campaign Efficiency.

How to Calculate your Digital Campaign

Last week we had a session with some marketing students at New Generation Marketing Firm and my team and I found out that most marketing professionals didn't really understand how to calculate their ROI (Return on Investment) in their marketing campaign.

In most of my sessions I noticed calculating ROI and data transparency has been a big issue in the marketing industry and in the business world as a whole, so I decided to write this article to assist marketers and small business owners to calculate every single dime spent on marketing, especially on advertising.

"Half the money I spend on advertising is wasted; The problem is I don't know which half." ~ John Wanamaker

This article is a series topic and I will be focusing on how to calculate cost-per-click (CPC) today and move further to cost-per-impression (CPM), how to calculate ROI in traditional marketing, etc.

Grab your book and pen as we start with Mrs. Sarah Jewelry's store.

Meet Sarah, a small business owner who is passionate about her handmade jewelry. Sarah has recently decided to advertise her business on social media to reach a wider audience and increase her sales. However, she is unsure how to calculate her cost-per-click (CPC) and wants to make sure she is getting the most out of her advertising budget.

Calculating CPC is essential for measuring the effectiveness of digital advertising campaigns. It represents the amount of money a business pays for each click on their ad, and helps determine the ROI (return on investment) of the campaign.

To calculate CPC, the formula is simple: Total cost of the campaign ÷ Total clicks = CPC.

Let's do some calculation

For example, Sarah's ad campaign on Facebook cost her $100 for 500 clicks. To calculate her CPC, she would divide $100 by 500, which equals 0.20. Therefore, Sarah's CPC for her Facebook ad campaign is $0.20 per click.

The total cost of the campaign ($100) ÷ Total clicks (500) = CPC (0.20).

Now, let's take a deeper look into how calculating CPC can help small business owners like Sarah.

For Sarah, calculating CPC was important because it helped her understand the value of her advertising investment. By tracking her CPC, she could adjust her campaign if she wasn't getting the desired results, or invest more if she was seeing a good ROI.

For instance, after a month of running her Facebook/Google ad campaign, Sarah noticed that her CPC was decreasing. This meant that her ads were becoming more effective, and more people were clicking on them. She decided to increase her advertising budget to take advantage of this trend and reached an even wider audience, leading to more sales for her business.

Calculating CPC can also help small business owners determine the most effective advertising channels. By comparing the CPC across different platforms, Sarah could see which channels were providing the most value for her advertising budget. For instance, she may find that advertising on Instagram was providing a better ROI than advertising on Twitter, leading her to shift her focus to the more effective platform.

In conclusion, calculating CPC is an essential tool for small business owners looking to make the most of their advertising budget. By understanding the value of each click, business owners can adjust their advertising campaigns to achieve better ROI and reach a wider audience. Whether you're a small business owner like Sarah, or a marketer looking to optimize campaigns, knowing how to calculate CPC is a critical skill in the ever-changing world of online advertising.

See you next week as we continue the series on how to calculate your marketing efficiency.