ROI and Conversions

Having all the web traffic in the world doesn't mean a thing if it doesn't produce the results you're after.

Return On Investment

Return on investment is basically a way of saying, "Is paying money for this actually making me more money?" When it comes to adwords campaigns, your advertisements will cost you every time someone clicks on your ad and is taken to your landing page. Once at your landing page, they will either decide to stay or leave, and that will be determined by several factors. Here's the formula for determining your return on investment:
(Revenue - Cost of goods sold) / Cost of goods sold

Relevancy of advertisement to landing page.
If your advertisement says "click here for free puppies" and then it leads people to a page that sells puppies for $800, they will probably be disappointed or irritated and leave. On the other hand, if your ad says, "Puppies for Sale, starting at $800" then they will be rewarded with relevant information. You don't want to mislead people with your ads because you will end up paying for clicks that don't produce sales.

Quality of Content
If your landing page has nothing but a product name and a price, it's possible you could make a sale if it's something the customer already knows about. On the other hand, it's always a great idea to provide as much relevant and high quality information about the product you're selling in order to encourage a sale and increase consumer confidence. If the page also includes your targeted keywords, that is also helpful for your SEO and Ad Quality Scores.

Call to Action
When selling, it's imoportant to ask for the sale. This can be done by including call to action buttons to purchase, to learn more about the product, etc. If you don't ever ask for a yes, it's harder to receive one. Calls to action don't necessarily have to be purchase calls to action. Asking people to sign up for a newsletter, or to click for more information can also bring them closer to completing an order.

Conversions

A conversion is when you are able to get your customer to perform an action through marketing efforts. Conversions could be completed sales, newsletter signups, readings of a website etc. In order to tell if your efforts are paying off, you need to determine where your results are coming from. You can track efforts by linking your Adwords account to your google Analytics. 

Your analytics account can tell you what sources are producing the best results for your website, and in turn, where you you should invest your time and money for the best return. For example, if you are spending $50 a month on Adwords advertising but none of those clicks have lead to a sale, then you either need to change the ad, change the landing page content, or change your keywords. It's also possible you could be making sales as a result of unpaid marketing efforts like Facebook posts. If that's the case, then you can confidently put in more time with your Facebook marketing and save money on advertising. It's important to note, however, that marketing isn't just using one magic tool, it's a whole bunch of marketing efforts combined into one marketing plan that will produce the results you're looking for. Newsletters lead to interested customers, Facebook posts can lead people to place orders as well, and social media can help build brand appreciation which also leads to sales.