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Today I needed a tailor to fix a seam in one of my suits for a wedding we need to attend to tomorrow.  Naturally, I turned to Google to see what I can find.  I normally don’t click on the first paid ad, or even map listing for that matter.  I also tend to steer clear of any Yelp listings as well (that’s just me).  Today I clicked on SewChic, a small boutique on my way to other errands I had to run.

roi of google adwords

So I gave them a call, and they graciously took care of me same-day, and in fact, I was done within ten minutes after walking through the door.  The bill?  A whopping $5.00.  She could have charged me $20.00 for the rush, and I would have been OK with it.  But I got to thinking, “gee, a $5 sale barely paid for the click on Adwords, let alone any management fees” – which would inflate the cost per click, if in fact they has someone running their campaigns for them.

But this is the kind of flawed thinking that, in my opinion, can distort the true Google Adwords ROI, or any online advertising for that matter.

What I mean by that is, sure, if you compare the direct impact of the sale associated with the cost of the click, then the ROI in this case doesn’t look all that great.  After all, I probably wasn’t their “ideal customer.”  But there are other things that could generate revenue off that first click, that are not only likely to be untrackable, but that we’re not even aware of; such as:

Future Sales/Visits – you have to consider the true lifetime value of a customer to look at ROI correctly.  I may have spent $5 today, but next week I may bring in my whole wardrobe and spend $200.

Social Sharing/Referrals – what if after my positive experience today at SewChic, I call a couple of friends and refer them?  Or I post it to Facebook, and one of my friends stops in next week?  This goes back to the issue of first click/last click attribution – which should get the credit?  I wrote about PPC attribution a while back.

Direct Hits/SEO – many times when we search, we click on the paid ad, then go back out looking for the main website in the natural listings and then click on that looking for more information.  If a sale or lead is generated, then Adwords is given the “assist” in the conversion funnel if you look at Multi-Channel Funnel metrics in Google Analytics, also part of my prior post on attribution.

The moral of the story is to consider how Adwords or other advertising may have “assisted” in other leads or sales for your business, rather than just focusing on direct impact.  You may find a pleasant surprise.