Let's continue our discussion of tracking the email deliverability costs of your pay-per-click (PPC) campaigns by exploring how to calculate the cost of user unknown bounces and complaints. 

We've already covered how to use a tracking code (or source or origin code) to match the bounces and complaints of your email campaigns to the PPC campaign that generated the email address.   We've also reviewed how deliverability costs can be built into your PPC analysis by either increasing the cost of a lead generated by a particular PPC campaign or decreasing the overall profit of a PPC campaign for each and every bounce and complaint you get.  So the next question is, how do you calculate the specific cost of user unknown bounces and complaints and build this cost into your PPC analysis spreadsheets?

Of course there are many ways to calculate the cost of a bounce and whichever is best is dependent on the particulars of your financial model.  Here's one cost formula that some online marketers may find useful: 

1. Start with the number of leads generated by a PPC campaign - what percentage bounced?  Calculate the "total number of bounces".   

2. If it takes 500 bounces to get you blocked by an ISP for a week what is the loss in revenue?  This is the "block threshold limit" which is the average number of "user unknowns" it takes to get blocked and assumes a week to lift the block.  (If you don't agree with this number, use whatever number you think is most accurate.)  

3. Divide "one week's revenue" by the "bounce block threshold" - this gives you the "cost per bounce".

4. Multiply the "cost per bounce" by the "total number of bounces" to get the "total bounce cost".

5. Your "bounce cost per lead" is then the "total bounce cost" divided by the total number of "campaign leads generated".

6. Add this "bounce cost per lead" amount to your "PPC cost per lead". You now have your "adjusted lead cost".

7. Repeat these calculations for other PPC campaigns.  You now have adjusted lead costs against which to compare your PPC campaigns.

Here's an example calculation.  If you'd like a preset Excel spreadsheet that makes modifying this calculation easy, please let me know in the Comments area below.

Now that we've covered bounce costs, next time we'll talk about how to factor in complaint costs.

Live Online Event Presented by DIRECT Magazine

Event Date: Wednesday, June 25, 2008 at 2:00pm ET / 11:00am PT
Outside the Inbox: New Ways to Improve E-mail Deliverability

Please join me tomorrow for the live Webinar "Outside the Inbox: New Ways to Improve E-mail Deliverability", presented by DIRECT Magazine.  Ken Magill, Editor of DIRECT Magazine, and I will discuss the fact that to really manage deliverability you need to focus on more than just your email – you also need integrated PPC, Web analytics and Web content management.  

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