http://www.komarketingassociates.

com

Pay Per Click Profit Calculator - B2B Lead Generation

© 2008 KoMarketing Associates, LLC. All rights reserved.

Metric Value Type Notes

Impressions Input Use existing PPC data or a keyword research
Click Through Rate Input Use existing PPC data or enter your own estim
Conversion Rate - Clicks to Leads (All) Input Use existing PPC/website data or enter your o
% Qualified Leads Input
% Conversion from Qualified Lead to Sale Input
Avg. Cost/Click Input This is your "fluid" value that needs to be plug
Avg. Sale Input Use your e-commerce data to estimate the av
Cost of Goods % Input Use your company's experience with profit ma
Operating Overhead % Input Use your company's experience with profit ma

Clicks - Calculated Consider how this will correlate to your budge

Leads (All) - Calculated
Qualified Leads - Calculated
Number of Sales - Calculated
Revenue $0.00 Calculated
Cost Of Goods Sold $0.00 Calculated
Operating Expense $0.00 Calculated
Advertising Cost $0.00 Calculated

Profit After Advertising $0.00 Calculated If this value is negative, then your PPC progra
% Profit 0
Profit/Click 0 Calculated If this value is negative, then your PPC progra

Target (Acceptable) Cost Per Lead (All) 0 Calculated Plugging this value back into the formula shou

Note: This formula does not specifically account for lifetime value of a customer. If you want to account for Lifetime Value, adj
 PPC data or a keyword research tool to estimate the number of searches you expect for a given time period
PPC data or enter your own estimates for the potential CTR
PPC/website data or enter your own estimates for the potential Conversion Rate

"fluid" value that needs to be plugged in to determine what your acceptable/target CPA is
commerce data to estimate the average revenue per transaction
mpany's experience with profit margin to estimate a value (if you have no COGS, set this to 0)
mpany's experience with profit margin to estimate a value (if you are not concerned with Contribution, and not with Net Profit, set this to 0)

w this will correlate to your budget (your Advertising Cost will be Clicks*Avg. Cost/Click)

s negative, then your PPC program is projected to be unprofitable

s negative, then your PPC program is projected to be unprofitable

s value back into the formula should give you $0 in Profit ($Revenue - $COGS - $Operating Overhead - $Advertising Cost)

ount for Lifetime Value, adjust the Avg. Sale figure in this model accordingly
http://www.komarketingassociates.com

Pay Per Click Profit Calculator - e-Commerce

© 2008 KoMarketing Associates, LLC. All rights reserved.

Metric Value Type Notes

Impressions 100,000 Input Use existing PPC data or a keyword research tool to estimate the number of searches you expect for a given time period
Click Through Rate 2.00% Input Use existing PPC data or enter your own estimates for the potential CTR
Conversion Rate 3.00% Input Use existing PPC/website data or enter your own estimates for the potential Conversion Rate
Avg. Cost/Click $0.20 Input This is your "fluid" value that needs to be plugged in to determine what your acceptable/target CPA is
Avg. Sale $10.00 Input Use your e-commerce data to estimate the average revenue per transaction
Cost of Goods % 40.00% Input Use your company's experience with profit margin to estimate a value (if you have no COGS, set this to 0)
Operating Overhead % 15.00% Input Use your company's experience with profit margin to estimate a value (if you are not concerned with Contribution, and not with Net Profit, set this to 0)

Clicks 2,000 Calculated Consider how this will correlate to your budget (your Advertising Cost will be Clicks*Avg. Cost/Click)
Conversions 60.0 Calculated
Revenue $600.00 Calculated
Cost Of Goods Sold -$240.00 Calculated
Operating Expense -$90.00 Calculated
Advertising Cost -$400.00 Calculated

Profit After Advertising ($130.00) Calculated If this value is negative, then your PPC program is projected to be unprofitable
% Profit -32.5%
Profit/Click ($0.07) Calculated If this value is negative, then your PPC program is projected to be unprofitable

Target (Acceptable) Cost Per Action $4.50 Calculated Plugging this value back into the formula should give you $0 in Profit ($Revenue - $COGS - $Operating Overhead - $Advertising Cost)

Note: This formula does not specifically account for lifetime value of a customer. If you want to account for Lifetime Value, adjust the Avg. Sale figure in this model accordingly
http://www.komarketingassociates.com

Pay Per Click Profit Calculator - B2B Lead Generation - EXAMPLE, SOFTWARE COMPANY
© 2008 KoMarketing Associates, LLC. All rights reserved.

Campaign: Manufacturing
Ad Group: Manufacturing Productivity Software
Keyword(s): all Note: There are 10 keyword concepts in this ad group, each using broad, phrase, and exact match = 30 total keywords

Metric Value Type Notes

Impressions 100,000 Input Over the past 3 months there have been an average of 100,000 monthly
impressions for this ad group; we have no history for the upcoming month from
last year (i.e. no seasonal benchmark); we are estimating roughly 100,000
impressions again this month (but this will depend on a number of factors
including daily budgets, bid levels, average ad position, etc.)
Click Through Rate 2.50% Input Over the past 3 months the average CTR for this ad group has been 2.5% (we
have been averaging position 4.5 on the page, and we expect to stay there, with
no change to ad copy)
Conversion Rate - Clicks to Leads (All) 1.20% Input Our only conversion action is a request for a free demo; we have averaged a
1.2% conversion rate for the past three months; we do not plan any changes to
landing page (or ad copy)
% Qualified Leads 30.00% Input Of the people who submit requests for a demo 30% on average become qualified
leads and enter our CRM system
% Conversion from Qualified Lead to Sale 12.00% Input Once a lead has been qualified, and is in our CRM system, we close 12% of
those into sales (takes an average of 6 months)
Avg. Cost/Click $1.31 Input Keywords in this ad group have been averaging $1.31/click over the past 3
months. While our model shows that we could spend more per click, our PPC
budget is fixed at $6,000/month, so we look at cell B33 to make sure we stay in
line with that budget (and this is 1 of 5 ad groups). We are considering lowering
our bids and moving from an average position of 4.5 to 5.5, which will drive more
clicks at a lower CPC (but will also lower our CTR). We will use this model to
examine the potential outcomes.

Avg. Sale $11,000.00 Input Our average sale over the past 12 months for the product line being promoted is
$8,000 up front and an average of $3,000 in recurring revenue for the next 12
months
Cost of Goods % 15.00% Input As a software company, we account for COGS in a way that puts most of our
overhead into a different bucket, but we do allocate a 15% COGS
Operating Overhead % 50.00% Input As a software company, the majority of our costs fall into an "Operating" bucket.
To be conservative (so that we maintain profitability), we estimate 50% Operating
Overhead (however, as a software product company this percentage will rise or
fall with changes in revenue because we have more "fixed" costs than variable
costs. We will need to adjust this percentage fairly regularly to keep our model
PPC current)

Clicks 2,500 Calculated

 Metric Value Type Notes
Leads (All) 30.0 Calculated
Qualified Leads 9.0 Calculated
Number of Sales 1.1 Calculated
Revenue $11,880.00 Calculated
Cost Of Goods Sold -$1,782.00 Calculated
Operating Expense -$5,940.00 Calculated
Advertising Cost -$3,275.00 Calculated We expect to spend roughly this amount on this ad group for the month

Profit After Advertising $883.00 Calculated

% Profit 27.0%
Profit/Click $0.35 Calculated

Target (Acceptable) Cost Per Lead (All) $3,061.84 Calculated If we choose to generate more leads, at BREAKEVEN, we know that we can
spend up to this $$ amount per lead.
http://www.komarketingassociates.com

Pay Per Click Profit Calculator - e-Commerce

© 2008 KoMarketing Associates, LLC. All rights reserved.

Campaign: Pens
Ad Group: Ballpoint Pens
Keyword(s): all Note: There are 15 keyword concepts in this ad group, each using broad, phrase, and exact match = 45 total keywords

Metric Value Type Notes

Impressions 750,000 Input Over the past 3 months there have been an average of 750,000
monthly impressions for this ad group; we have no history for the
upcoming month from last year (i.e. no seasonal benchmark); we
are estimating roughly 750,000 impressions again this month (but
this will depend on a number of factors including daily budgets, bid
levels, average ad position, etc.)

Click Through Rate 5.00% Input Over the past 3 months the average CTR for this ad group has been
5.0% (we have been averaging position 6.5 on the page, and we
expect to stay there, with no change to ad copy)
Conversion Rate 2.30% Input Our only conversion action for this is a sale. We have averaged a
2.3% conversion rate for the past three months; we do not plan any
changes to landing page (or ad copy)
Avg. Cost/Click $0.07 Input
Avg. Sale $9.83 Input Our average sale for someone purchasing products on our site for
this keyword set is $7.50. On average we generate an additional
$2.33 per customer in the course of the following 12 months.

Cost of Goods % 40.00% Input It costs us 40% of revenue to manufacture and deliver this product.

Operating Overhead % 22.00% Input We allocate 22% overhead across the board for all products (at least
in our basic pro forma budgeting/projections)

Clicks 37,500 Calculated

Conversions 862.5 Calculated
Revenue $8,478.38 Calculated
Cost Of Goods Sold -$3,391.35 Calculated
Operating Expense -$1,865.24 Calculated
Advertising Cost -$2,625.00 Calculated

Profit After Advertising $596.78 Calculated

% Profit 22.7% Calculated
Profit/Click $0.02 Calculated

Target (Acceptable) Cost Per Action $3.74 Calculated We know that if we want to spendd until the program is
BREAKEVEN, we can afford to pay this $$ amount per sale.