• Sean Roach

    I very much agree this tool is very simple. As such, your questions, while valid enough, may be seeking too much. We’re really looking at little more than a fancied up excel formula: Max CPC = Rev/Conv*Conv%/(1+ROI). Within those limitations, the simplicity is what makes this such a useful tool.

    Whereas it is critical for companies to define what ROI truly means to them, that is way beyond the limits of this tool. In this case, much like with ROAS, only media costs are factored: ROI = (Rev-Cost)/Cost. The reason it is capped is precisely the same reason that Rev/Conv is capped: the options are theoretically infinite, thus it *must* be capped somewhere. If any cap is confusing, it is that Conv%, the only number with a reasonable limit, is capped at a quarter of that limit. (Granted, for most folks 25% would be an obscene Conv%).

    Finally, as for whether the number generated here would match the one in Adwords, I imagine the makers of the tool would argue it should. The reason has nothing, however, to do with quality score. The likely argument would be that, given the input variables, the number produced by this tool is what one should be willing to bid—-should be willing to list as their Max CPC—-within Adwords.

    Again, the questions raised in this post are good ones. To me they just appear, however, to overstep the tool’s intentions.

  • Mister Cox

    Ah, thanks! This settled up some confusion I’ve heard.