At first glance, measuring the success of your Google Ads looks simple: are you making money with them or not? But once you dig beneath the surface, you’ll come across various metrics which help you go granular on the inner workings of your campaigns.
So today, I’ll show you how to measure the success of your Google Ads campaign – even if this is your first time running Google Ads.
- A 2-minute framework to understand your campaign ROI
- Cost per Acquisition
- Cost per Click
- Conversion Rate
- Ad Quality Score
- Click-Through Rate
Quick Formula: Calculate Your ROI to Measure the Success of Your Google AdWords Campaigns
Before I dive into specific metrics, I want to give you a framework that explains how to understand (or forecast) your Google Ads ROI:
Suppose you’re a plumber who needs leads in Bristol. On average, you charge £350 per job. When you remove the operating costs, your profit is £300 per each job.
You’re prepared to give up 50% of that to succeed with Google Ads, so your maximum ad spend to acquire a customer would be £175.
When you log into your Google Ads dashboard, first look at your conversion rate. Out of everyone who sees your ad and visits your landing page, how many end up converting? Suppose you convert at 5%.
Secondly, you’ll look at your CPC (cost per click). Let’s suppose it’s £1 per click.
If you convert at 5%, you’ll need to get at least 20 people to your website.
With £1/click, those 20 leads’ clicks will cost you £20.
Let’s return to your maximum spend to acquire a customer, which is £175. The actual money you’ve had to spend to acquire one customer was £20, making your campaign more than successful.
Now, this is the basic maths of profitable campaigns.
But all these metrics merit a deeper look, so you know which tactics Google Ads experts leverage to increase your campaign profitability.
1. Cost per Click & Cost per Acquisition Define the Success of Your Google Ads Campaign
We’ve touched upon CPA (cost per acquisition) earlier because it makes or breaks your campaign’s profitability: how much money do you need to spend to win a customer?
Now, start with either your historical CPA or a reasonable sum that you’re prepared to pay to acquire a customer.
Once you launch your ads, look at the CPC to see how you can get the most “bang for your buck.”
Cost per Click’s Effect on Your Google Ads Success
Some industries traditionally have higher CPCs, but there is always room for improvement.
Suppose your current CPC is £5, while your industry pays £2. This would be a good signal that you need to optimise your CPC by increasing your ad’s Quality Score (more on that below).
Conversely, if you’re paying £5 per click and your industry is paying £10, you’re on to something. It’s in your best interest to figure out why your ads are better than the competition’s, so you can scale them profitably.
Ultimately, your CPC is a crucial part of your CPA. If you pay more for each click (and depending on your conversion rate), you’ll be taking chunks out of your CPA needlessly. Your bids should always be optimised to get enough impressions while maintaining quality to increase conversions.
2. Conversion Rate
Secondly, to maximise the effectiveness of every single click, ensure that as many clicks as possible convert into paid customers.
Returning to our earlier example, if you’re converting at 5%, you need at least 20 people to click on your ad to generate 1 customer. But if you convert at 10%, those 20 people will generate 2 customers for you.
Keep in mind that you should have robust Google Ads conversion tracking, so you can accurately track conversions.
For example, do you want to monitor actual conversions that were generated through phone calls – or is a lead gen form fill-out a good enough proxy?
Typically, I try to focus on direct conversions for my Google Ads management clients. We import offline conversions, monitor on-site details, and more. However, depending on the nature of your business, your setup might be different.
If your conversion rate doesn’t look good, review your…
3. Ad Quality Score
You can’t hop on a call with a Google Ads support representative to ask them if they think your ad is good. However, you do have your ad’s Quality Score – a signal of whether your ad meets the searcher’s intent with:
- Your copy
- Your targeting
- Your landing page(s)
When your Quality Score is high, your CPC is lower. Google rewards your ads for more closely matching the searcher’s intent.
In my experience, the best way to tailor every ad to specific audience segments is to use the right account structure. Create distinct ads for distinct offers and audience types. For example, as a plumber, you’d set up separate ads for emergency services and plumbing renovations.
4. Do Click-Through Rates and Impressions Matter?
They do, but they’re at the bottom of my list for a reason: they’re not as crucial to understanding your ROI as the metrics I mentioned above.
Your click-through rate signals whether you’re targeting the right keywords and using ad copy that resonates with your potential leads.
Impressions, on the other hand, show you whether there’s a close match between your target keywords and actual searches. Typically, you might get lower impressions than expected if your budget is not big enough to compete for searches or your Quality Score is extremely low.
The Key to Measuring the Success of Your Google Ads Campaign
It’s not as complicated as it looks!
- Ensure you’ve implemented Google Ads conversion tracking and Google Analytics. Connect them to your campaigns to monitor conversions accurately.
- Start with your CPA (cost per acquisition): how much are you prepared to pay to acquire a lead?
- Look at your conversion rate and CPC: how many clicks do you need to convert 1 customer? How much will you pay for all the generated clicks?
- Are you paying too much for clicks? Increase your ad’s Quality Score or contact a seasoned Google Ads expert.
- Is your campaign not generating enough impressions? Check your budget or contact a professional to troubleshoot.
Ultimately, if your campaigns break even, consider how you can further optimise your CPC and ads.
And if your campaigns are already profitable, gather the learnings and scale them to generate even more top-quality leads!
Need help launching a successful campaign? Get your copy of my best-selling Google Ads book to set up a profitable campaign in 7 rapid steps!
Or contact me for a personalised consultation. With 15+ years of experience running profitable Google Ads campaigns for my clients and my own businesses, I’m here to help!