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Roi (8)


09-11-2012 08:15 PM #1 hd2010 (Member)
Roi

I'm getting more confuse when trying to this equation right.. when I put in this equation in excel with these numbers, it gives me an ROI of 50%, wondering why is not 100%

ROI = (EPC-CPC/EPC)*100

EPC = 0.40
CPC = 0.20

ROI : calculated is 50%

if I use CPC of USD0.20 to make USD0.40 with a profit of USD0.20, aren't the ROI is 100% ?

haha I sound like a newbie , anyone can shed a light ?


09-11-2012 08:31 PM #2 hd2010 (Member)

ok I guess myself is too tired, wrong formula : ROI = (EPC-CPC/CPC)*100


09-11-2012 09:15 PM #3 zeno (Administrator)

I think you're confusing EPC/CPC and revenue/spend. Getting ROI like that only really makes sense on an ad-level basis and would assume an average/unchanging CPC and EPC. Replace EPC with revenue and CPC with spend and you have ROI.

I.e. ROI = ((Revenue - Spend)/Spend)*100


09-11-2012 09:42 PM #4 inversion (Member)

The equation works with EPC and CPC, you just have to write the equation like zeno.

ROI = ((EPC - CPC)/EPC)*100

NOT (EPC - CPC/EPC)*100


09-12-2012 02:01 AM #5 hd2010 (Member)

Figured this out, ROI basically is the return on investment means a measurement of the return you get from your adspend invested, hence it should be (EPC-CPC)/CPC, not (EPC-CPC)/EPC


09-12-2012 02:39 AM #6 zeno (Administrator)

Yah. Just be aware that using EPC/CPC is going to give you results influenced by how accurate the values are. If you calculate EPCs yourself based on (leads/clicks) x payout then you're fine there, whereas using the rounded EPC from a network will be off by a bit, and the CPC from most traffic sources is going to be an average. E.g. on FB if you are seeing CPC $0.15, each click itself could be anywhere between 0.10 and 0.30 depending on a lot of things, especially if the advert is new and has had a dropping CPC, and with CTR fluctuation. Those values are to two significant figures whereas spend and revenue are going to be to four significant figures (and are actual amount spent not an average CPC).

Thus, I would encourage usage of spend/revenue for ROI calculations on the advert/campaign level where possible. It's generally easier anyway as you skip the EPC calculation, and additionally removes the effect of averaged CPC prices displayed by a traffic source.

That is all.


09-12-2012 04:48 PM #7 inversion (Member)

Oops, yeah, I got that wrong. <blush> (EPC-CPC)/CPC is correct.


09-12-2012 08:46 PM #8 mehdi (Member)

I personally remember it like profit/cost*100


Mehdi


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