How can I maximize my Adwords profits?

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As Lucid pointed out a profit, in most cases should be your primary KPI, every other metric should be subordinate to your primary KPI.

You can, and should, calculate and track your primary KPI in AdWords.

Here’s the basic formula:

(VPC – CPC) * Clicks = Total Profit

Where:
VPC = Value Per Click
CPC = Cost Per Click

To optimize your profit, simply adjust your Max. CPC in the direction that increases your primary KPI, total profit.

Since AdWords does not provide a column for calculating profit, you generally need to export your data into a spreadsheet to calculate your primary KPI or use a bid management tool that has the ability to calculate profits.

Of course, there are many other things you can do to optimize profit, the above just mentions a formula to calculate profits and a method to optimize bids at the individual keyword level.

Here’s a Video Hal Varian, Google’s Chief Economist, did on bidding for maximum profit:

Google AdWords Bidding Tutorial – YouTube

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