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Estimated marketing return on investment

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Reference no: EM133313420

A company called E-Shop.com conducted A/B testing to evaluate the effectiveness of the search engine ads. More specifically, consumers who searched the keywords "E-Shop" are randomly assigned into two groups based on their IP address:

No-Ads group: the paid link does not appear in the search results;

Ads group: the paid link appears on the top of the search results. When the potential customer clicks the sponsored link of E-Shop.com, E-Shop.com has to pay $0.6 to Google per click.

After a month, E-Shop.com found that the No-Ads group contribute $1 million in gross profit.

In the Ads group, 600,000 consumers clicked the paid link. Once the customer lands on E-Shop.com, the probability of making a purchase is 10%. On average, E-Shop gets $20 profit per customer from the goods sold when the customer makes a purchase.

What is the estimated marketing return on investment (MROI) of conducting search engine ads on Google?

(Here MROI = Incremental Profit Generated because of Ads / Cost of Ads * 100%)

Reference no: EM133313420

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