PPC CHALLENGES - IS YOUR PURSUIT OF ROI GETTING IN THE WAY OF PROFIT? (PART 1)

Here is an excerpt:

I remember two things about my first visit to Google on a training day as a Junior PPC Exec many years ago. The first was the huge spread of desserts loosely referred to as “breakfast” of which I enthusiastically decimated. The second was a question asked to the room about the relative importance of Profit, ROI, and a number of other KPI’s such as Conversion Rate and Click-Through-Rate. The question was simple – “To a business, which is the most important?”. I sat there at the time thinking that it must be Profit, but not with the conviction where I said anything out loud, because ROI is important right? Clients always want ROI. They did a show of hands, and more people raised their hand for ROI than they did profit. When you think that the point of running a business is to make profit, any other answer than profit seems ridiculous. Yet more people (albeit entry level execs, but an intelligent bunch of people nonetheless) raised their hand for ROI than they did profit before being collectively corrected. Why?

As it turned out, it was not just a room of Junior Execs that were prone to such thinking. Since that training day 6+ years ago, I have worked with people of many levels, both client and agency side, who prioritise ROI as the be all and end of performance. This is more because we so often focus on ROI, which is anchored as the main priority, and we lose sight of the end goal…profit. It’s not an obvious problem, because more often than not ROI and Profit correlate pretty well. You are not going to do much wrong in terms of efficiency if you focus solely on ROI. However, the strongest ROI does not mean the most profit, and that is key here. ROI is relative to the level you are spending.

Only when spend remains the same can a stronger ROI always mean more profit. As soon as the level of spend changes, the value of ROI loses context.

Click the link to read the full PPC-ROI vs. Profit article.

WRITTEN BY

BEN LIPSCOMBE

HEAD OF PPC (RED HOT PENNY)