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Your client's product costs US$50 to produce, and it sells for US$150. She's sold 10 units and spent US$700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?
A) [US$1500 (revenue) - 10(number of products sold)]/US$1200(cost + AdWords spend)
B) US$1500 (revenue) / US$1200 (cost + AdWords spend)
C) [US$1500 (revenue) - US$1200(cost + AdWords spend)]/US$1200(cost + AdWords spend)
D) [US$1500 (revenue) - US$1500(cost)]/US$700(AdWords spend)
ROI is the ratio of your net profit to your costs. It's typically the most important measurement for an advertiser because it's based on your specific advertising goals and shows the real effect your advertising efforts have on your business. The exact method you use to calculate ROI depends upon the goals of your campaign. One way to define ROI is: (Revenue - Cost of goods sold) / Cost of goods sold
