How To Track ROI Of Google Ad Campaigns
January 21, 2021
Return on investment (ROI) is a measure that looks at how much profit you have made compared to the costs that you have spent on something, in this case, Google ads. To get the ROI of your Google ads, subtract total costs from the gross revenue generated by your ads. To track ROI, trace a buyer's journey from the moment they click on your ad to the moment they make a purchase.
Do it consistently
Tracking your ROI from Google ads should be done regularly. The procedure helps you evaluate the success of your PPC strategy. Without regular measuring of conversion and actual sales from the campaign, it can be hard to identify ways to improve. And when that happens, your competitors will get a big leap ahead of you.
Understand the parameters that influence Google ads performance
Think of Google ads as a football match where you, the coach, has a team of 11 players, all of them playing critical roles in the outcome of the game. Now, the number of these players may not necessarily be 11, but it critically includes bids, targeting, budgeting, and many other things. You, as the coach, must know how to team up these 'players' effectively for better performance.
Google ads ROI is a number that could mean a lot for your business
On the face value, the ROI you get after tracking sales from your Google ads and doing the calculations indicate the success of your campaign. Looking at it keenly though these numbers provide much more information about your market, your customers, brand love, level of competition, and the like. Mastering the relationship between ROI and these aspects of your business can help to inform your growth strategy and product direction.
You can slash costs and maximize returns
Any performance testing endeavor in internet marketing should target to reduce costs and help to drive up the numbers in revenue. When you sit down to analyze your ROI from Google Ads, the inspection should help fill the gaps in your strategy. Expert analyse reveals that measuring your Google ads ROI the right way can increase sales by up to 74%.
But 76% of marketers don't know how to do it! (proof)
That's an alarming statistic, especially now that you have seen how measuring ROI from your Google ads is critical and vital to your business. If you fall under this number, not to worry, for below, we reveal the simple steps to getting the ROI figure.
Step 1 Track conversion
An actual sale or 'return' for that matter only happens when you successfully convert a new person into a customer. In other words, you can only measure ROI by knowing how many people bought your product after seeing your ad and clicking on it. Clicks that didn't lead to a sale cannot be used in the Google ads ROI calculation.
What we do at SparrrowBoost is track the clicks from search engine results pages to the Thank You page after the user finally buys the product/ requests service. But saying that that is all we do to track conversions would be an understatement. Conversion tracking is an intricate process that we do it comprehensively through:
- Call tracking: for customers that called after seeing the ad.
- URL tracking: Helps to trace all people and the actions they take after clicking on your ad
- Mobile app conversion tracking: For app downloads
- Offline conversion tracking with CRM: Accounts for footfall to your store from the ad
Pro tip: Always track something quantifiable. The above conversion tracking methodologies works like magic when dealing with sales. But what about consultations, signups, and free trials? These cannot be used to calculate ROI because, in all blandness, your bank account hasn't been credited.
Focus on the money.
Step 2 Track your PPC budget
Now that you have the total number of conversions and actual sales from the ad shift focus to what you have been spending. Ideally, tracking your PPC budget should be something that you do every day. There are many software tools that you can leverage to automate and simplify the process.
For visibility into the ROI of your campaign, you must determine how much money you have been spending on it in the given time frame. It could be a week, a day a month, or even an hour.
The budget calculations need to comprehensively cover the initial amount you spent on bidding, plus the extra amount spent in optimization and expansion. The most direct way to evaluate the budget is to look at the cost per click of your keywords and the duration of your Google ads campaign.
But remember that Google ad costs are not limited to what you spend on the platform. To the daily, weekly, or monthly budget spent on Google ads, add the total costs of operating your business in that time frame. That can include expenses like payroll, utilities, and so forth.
Step 3 Subtract cost from revenue
Take the costs figure in step 2 and subtract it from the conversion revenue you got in step 1. The result is your ROI from Google ads. Your ROI is positive if sales revenue is more than the costs. If costs are more, you might consider pausing your campaign and rethinking your strategy.
Step 4 Narrowing down ROI to keywords
If you intend to use this ROI figure to inform your keywords budgeting, you will have to calculate earnings per click.
Earnings per click = (ROI ÷ number of conversions) x conversion rate of keyword
For instance, if $1000 is your ROI, and you had 20 conversions, the revenue generated per conversion is $500. If the conversion of the rate of your targeted keywords is 1%, then earnings per click is $5.
Tracking the ROI from your Google ads campaign can be a complex process. You must make careful evaluations of your revenue by setting up conversion tracking and evaluating your budget, spend online and offline. A successful monitoring of Google advertising ROI can help to inform the best strategies for your business.
About THE AUTHOR
After working for multiple digital advertising agencies and managing hundreds of client accounts, spending millions of dollars via Google Ads, Facebook Ads, Native Ads and Direct Media Buying, I took things out on my own and started SparrowBoost. Now, my tight-knit team and I continue to get smarter and more efficient at running our own campaigns and we share our knowledge with you.Learn more about SparrowBoost