Executives at a small e-commerce company are debating AdWords performance metrics. If the budget is unlimited as long as return on investment (ROI) is positive, which recommendation best positions the company for maximum profit?

Executives at a small e-commerce company are debating AdWords performance metrics. If the budget is unlimited as long as return on investment (ROI) is positive, which recommendation best positions the company for maximum profit?

  • Ad spend should always be 7% of revenue, which should be used as the target ROI
  • Determine whether the campaigns are profitable, then test different target cost-per-acquisition (CPA) bid increases to see which maximizes total profit
  • The company’s email campaigns are the most profitable, with a cost-per-acquisition of £15, so it should use that as a benchmark when setting target cost-per-acquisition (CPA) bids
  • Decrease the target cost-per-acquisition (CPA) for the campaigns from £15 to £10 to drive an increase in profit per customer

The correct answer is:

  • Determine whether the campaigns are profitable, then test different target cost-per-acquisition (CPA) bid increases to see which maximizes total profit