As global digitization accelerates, organizations realize the impending need to invest in digital advertising.
In 2018, the total national ad spend exceeded $125 billion – and it is predicted to continue to rise YOY:
With rising expenditure comes increased scrutiny.
With cutthroat competition, not every ad campaign can drive conversions and offer adequate ROI.
So, how do you know if the money you’re investing is generating revenue or not?
This is where ROAS comes in.
ROAS, or return on ad spend, is a metric for online advertisers, enabling them to track the money they make.
By calculating ROAS, you will know how many dollars you earn for each dollar spent. Additionally, it will determine which ad strategies and techniques work well so that you can apply those to your other ad campaigns.
ROI, or return on investment, is a business-centric metric used to evaluate the effectiveness of your marketing efforts as a whole.
It helps you understand how ads are contributing to your overall business finances and profit.
On the other hand, ROAS assesses the performance of specific campaigns, ad groups, or keywords.
As it focuses on individual advertising campaigns, ROAS is an ad-centric metric. It measures the gross revenue generated based on each dollar spent on ads. This way, you can learn which of your paid ad campaigns are useful and which ones you need to stop pouring money into.
To calculate ROAS for Pay-Per-Click (PPC) ads, you need to know the total PPC revenue generated by your ad strategy and the total cost of managing your ad strategy.
This includes revenue you earn from all different sources, such as product purchases and lead conversions.
Similarly, your cost includes all the expenses you incur when running your ads, such as Cost-Per-Click (CPC), management fees, software upgrades, and partner/vendor costs. Additionally, if you have purchased clicks and impressions, they will add to your expenses.
Now that you have these two figures, you just have to plug them into the ROAS formula.
There are two formulas you can use:
Divide the revenue you made from your ad campaign with the amount you spent to run your ad.
So, for example, you spend $200 on a PPC campaign and make $400 in return. Adding these values to the formula will give you a ROAS of $2. This means you’re making $2 for every $1 you spend.
However, calculating ROAS through this formula only gives you a general overview. It doesn’t tell you the overall profitability of your campaign.
So, for example, you spend $200 and make $400. But your vendor fees also cost $50. Then, the ROAS you calculate will not accurately depict the return you get.
For this reason, it’s better to use the second formula.
If you subtract your cost from the revenue before dividing the result by the cost, it will give you an adequate ROAS.
This formula doesn’t require you to evaluate any new values since it only needs the total revenue and cost. And plugging values in this formula will help you determine your marketing budgets effectively.
ROAS is a metric that needs to be tracked regularly. Ideally, you should track your ROAS throughout the ad campaign instead of at one particular time.
Although there are many indicators you can utilize to assess the success of your marketing campaigns, the end goal of your business is to earn more money.
This means tracking conversions and sales isn’t enough on its own; you need to fit them within your ROAS tracking mechanism.
But first, you need to calculate your revenue. And you can do it by following the two steps below.
The first step is to track your conversions. And you can easily do that on online advertising platforms like Google Ads, Facebook, Twitter, and Bing Ads.
All you need to do is use these platforms to set up an ad campaign and conversion tracking. If you’re using Google Ads, you can even track phone call conversions.
This way, you will know which clicks on your PPC ads led to which purchases. In addition, you will stay updated on your conversion rates and purchases that result from ad clicks.
The next step is to connect your online advertising platform to customer relationship management (CRM) software.
By doing this, you can tie all your marketing data to a new lead. Hence, when a lead converts into a customer, you’ll know exactly which marketing efforts led to the sale.
So, by tracking your conversions and sales, you get access to your revenue data. Simultaneously, the advertising software you use will detail your ad spend.
Now, all you need to do is plug the values in any of the two ROAS formulas, and you’ll know whether your money is being spent right or not.
ROAS enables you to gather valuable insights – based on which you can make informed marketing decisions.
Since the final goal of advertising is to make money, calculating ROAS should be a priority. Even though conversion rate and click-through rates are essential, they don’t guide you regarding changes to your advertising model.
In addition, knowing your ROAS can help you do the following:
Using other metrics alone will not give you complete insights, so you will not make informed marketing decisions.
Think about click data – it tells you the best click-through rate (CTR) and the lowest cost-per-click (CPC). So based on this data, you might think you can evaluate which of your campaigns are successful. But that’s not possible because CTR and CPC don’t tell you the quality of clicks and the traffic you’re getting.
Similarly, conversion data helps you track conversions and point out areas of weakness in your strategy. But it will not determine the quality of traffic and leads you are receiving.
However, ROAS ties all these metrics together by providing you with actual numbers you’re earning and spending on each channel.
Additionally, various factors result in a lower CPC or conversion rate, but that doesn’t mean your campaign is unsuccessful. In fact, such campaigns can still have high profitability. But if you don’t calculate ROAS, you won’t know that.
And then you will make decisions that will cost more than you gain.
A good ROAS target depends on many factors, including your industry, average CPC, and profit margins. This means a satisfactory ROAS varies from business to business.
In addition, a good ROAS differs from campaign to campaign. For instance, campaigns that aim to raise awareness, grow subscriptions and build a following generally have a low ROAS.
But if you want to drive a greater number of conversions and sales, you should expect a higher ROAS.
Still, no general rule can determine how high your ROAS should be. But, most businesses do aim for an overall 4:1 ratio.
Getting $4 for every $1 spent gives you enough money to keep your business afloat or even make a profit.
Here is a breakdown of different ROAS targets you should be aiming for at different phases of your business:
Most businesses think if they make a sale that amounts as much as they spent on marketing, they will break even.
But that’s not true because when you factor in all your variable and fixed costs, you are likely making a loss.
So, making $1 for each dollar you spend on your PPC ad campaign is not enough.
Let’s say you spend $100 on marketing and make a $200 sale. It means you are earning $2 for every dollar you spend.
But, 2x ROAS is still low because fixed costs are generally high, resulting in a deficit.
As long as you get some consistent sales, you can break even with a 3x ROAS.
For example, you spend $50 on marketing, which results in a $150 sale. So, now, you have an added $100, which you can use to cover additional ad-running costs.
4:1 ROAS is where you start making a profit, which is why most businesses aim for at least a 4x ROAS.
When each dollar spent gives you $4 in return, you have enough money to make a profit. But ultimately, that depends on your business model and costs.
So, if you have very high variable and fixed costs, it may not result in a profit. But that is often not the case.
With a 5x ROAS, you can start using your marketing practices to grow your business.
At this stage, you’re making enough profit that you can afford to invest more in your marketing and customize various goal-specific ad campaigns.
In the end, the ideal ROAS for your business depends on your ROAS targets, business expenses, and marketing goals.
Also, if you have different PPC campaigns running simultaneously, set separate ROAS targets for each. Then, calculate their ROAS individually to see if they are bringing in enough cash.
But if your ROAS is still low, look into all other metrics and practices to identify the reasons behind it. Then, when you know which strategies are working, you can implement those across other campaigns.
Not being able to meet your ROAS target can be frustrating. But a low ROAS doesn’t always mean that your campaign is a complete failure.
Sometimes, you can make small changes to your current campaign to increase ROAS.
Some tweaks you can make are:
Placing an ad at the right location is key to attracting quality traffic. So if you have a low ROAS, consider changing the location of your ads.
For example, try placing them on e-commerce sites or social networking sites. Additionally, you can change the layout for your ad, such as converting a banner ad with a pop-up.
Your ad copy should gauge the user’s attention, resulting in the maximum number of ad clicks.
Similarly, your ad copy should be optimized for SEO so that your ad can show up organically in search results.
A helpful tip to follow is to use specific, long-tail keywords that are relevant to your brand.
For more detail, please visit our post outlining and weighing the difference between SEO and PPC.
Targeting 56.16% of all web traffic that comes through mobile phones can boost your ROAS.
If your advertising campaign is limited to desktops and isn’t generating high revenue, you should consider running mobile ads.
Use your ROAS to eliminate campaigns that are performing extremely poorly. Instead, use that money and effort on campaigns that show growth potential.
At the same time, try not to get carried away with spending on ad campaigns. So, place a cap on your budget for PPC campaigns because lots of click-throughs are only beneficial if your budget supports them.
Return on ad spend (ROAS) is a valuable metric that businesses of all sizes can use. And it helps you allocate adequate budgets for numerous ad campaigns.
Globally, 31% of all online users click on ads, which means investing in online advertising has a good chance of increasing leads. But to make the most of your marketing efforts, you need to strategize accordingly.
By regularly tracking your ROAS, you will make informed, data-driven decisions that will eventually boost your revenue.
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Pay-per-click (PPC) advertising is the lifeblood of modern digital marketing, a finely tuned machine designed to separate serious advertisers from those who enjoy setting their money on fire. At its core, PPC is about buying attention—whether it’s from Google Ads, Facebook (or should we say Meta?) Ads, LinkedIn’s overpriced clicks, or whatever ad network is currently promising “unprecedented results.” The trick, of course, is making sure that the attention you’re paying for actually turns into conversions, and not just a collection of clicks that lead nowhere.
This guide is for marketers who already know the basics and are ready to squeeze every last drop of ROI from their PPC campaigns. If you’re looking for a “Beginner’s Guide to Google Ads,” this isn’t it. But if you’re tired of watching your ad spend disappear into the void and want to start running PPC like a ruthless efficiency machine, read on.
There’s nothing quite as tragic as a PPC campaign with no clear objective. Running ads without goals is like throwing darts blindfolded—sure, you might hit the board occasionally, but mostly you’re just making a mess. Before you even think about setting up a campaign, define what success looks like. Are you driving leads? Pushing e-commerce sales? Increasing brand awareness (ugh, we’ll get to why that’s usually a waste of money later)? If your goal is just “more clicks,” congratulations—you’ve just fallen for the ultimate PPC scam: paying for traffic that doesn’t convert.
Every campaign should have a quantifiable, measurable outcome tied to business KPIs. That means actual revenue, leads that don’t ghost you, or at the very least, cost per acquisition (CPA) that doesn’t make your CFO break out in hives.
Google Ads is the undisputed king of PPC, but let’s not pretend it’s the only game in town. Depending on your audience and objectives, Meta Ads (Facebook and Instagram) can still be a goldmine—if you’re willing to put up with Meta’s ever-changing rules and the occasional algorithmic meltdown. LinkedIn Ads? Great if you enjoy paying $12 per click for someone who will never fill out your lead form.
And then there’s the rising trend of alternative ad platforms. TikTok Ads are fantastic if you’re targeting Gen Z and have the budget to experiment. Microsoft Ads (formerly Bing Ads) may be the underdog, but they offer cheaper CPCs and a surprising number of high-intent users. If you’re in e-commerce, don’t ignore Amazon Ads—they print money for sellers who get their targeting right.
Google would love for you to just use broad match keywords and let their algorithm “figure things out.” Spoiler alert: this is a terrible idea. Broad match means your ad could show up for searches so unrelated to your business that it’s practically performance art.
Instead, focus on high-intent keywords—the ones that indicate users are actually ready to buy. Long-tail keywords often convert better because they signal more specific intent. The goal is not just to drive traffic, but to attract users who already have their wallets half-open.
Want to know what works? Look at your competitors. Tools like SEMrush, SpyFu, and Google’s Auction Insights let you see what keywords they’re bidding on, which ones they’re ranking for, and—most importantly—where they’re burning money so you don’t have to.
If a competitor is bidding on specific high-intent keywords, that’s your signal to investigate. Either they’re seeing a positive ROI, or they’re making an expensive mistake that you can learn from. Either way, it’s free intelligence.
Great PPC ads aren’t just about catchy headlines—they’re about aligning with search intent, making a compelling offer, and convincing users that clicking your ad is the smartest decision they’ll make today. A well-optimized ad uses clear, persuasive language with a direct CTA, because vague CTAs like “Learn More” are about as useful as a screen door on a submarine.
A/B testing is non-negotiable. Your gut instinct is probably wrong, so test different headlines, CTAs, and descriptions to see what actually drives conversions. If you’re not actively testing, you’re just guessing.
You have about three seconds to convince visitors that they made the right choice clicking your ad. If your landing page loads slowly, looks like it was designed in 2008, or makes users hunt for the CTA, they’re gone.
Your landing page should have a singular focus: conversion. That means no distractions, no unnecessary links, and definitely no autoplay videos that scare people away. A strong landing page aligns perfectly with the ad copy, ensuring a seamless experience from click to conversion.
Nothing kills conversion rates faster than misleading ad-to-landing page alignment. If your ad promises “50% off running shoes” and your landing page is a generic homepage with no mention of that discount, expect a bounce rate that makes your campaign ROI cry. Every landing page should reinforce the ad message, use clear headlines, and make it painfully easy for users to complete the desired action. If a user has to think, they’re already gone.
If you’re still using manual CPC bidding across all campaigns, congratulations—you’re officially working harder, not smarter. Google’s automated bidding strategies have their place, but blindly trusting the algorithm is like handing your credit card to a stranger and hoping for the best.
Smart bidding, when done correctly, can optimize conversions and lower CPA, but it requires constant monitoring. Target ROAS (Return on Ad Spend) and Maximize Conversions can be effective, but only if you have historical data to feed the algorithm. If you’re running a new campaign, manual bidding still gives you more control.
Running PPC without proper tracking is like driving blindfolded and hoping you’ll reach your destination. You need to track not just clicks, but actual conversions, customer lifetime value (CLV), and return on ad spend (ROAS). Google Ads’ built-in tracking is decent, but combining it with Google Analytics, heatmaps, and call tracking will give you a full picture of what’s working.
Scaling PPC isn’t as simple as increasing your budget and watching conversions skyrocket. If you scale too fast, you’ll tank your ROI. The right approach is incremental scaling—gradually increasing spend while monitoring CPA and conversion rates. If your CPA starts climbing faster than your revenue, it’s time to reassess. And if your PPC manager insists that “everything is going great” while your ROAS tells a different story? It might be time for a new PPC manager.
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Most marketers love Google Ads.
We're no exception.
But we totally understand that businesses in certain industries sometimes have a deep resentment of Google Ads and their restrictive policies.
Google's policies for advertising are generally intuitive and straightforward, but for certain regulated and sensitive categories, the standards are much higher and less clear. Pharmaceutical companies, gambling websites, political campaigns, and other industries often struggle to get their ads approved consistently.
In fact, if you don't know what you're getting into, trying to advertise as a business in one of these categories can be a recipe for disaster.
How are you supposed to use Google Ads effectively if you belong to one of these regulated or sensitive categories?
Sensitive and regulated categories in PPC advertising face a number of challenges, including:
· Stricter guidelines. Most PPC advertisers are familiar and comfortable with basic Google Ads guidelines. But if you belong to a regulated or sensitive category, you'll have far more guidelines and more nuanced guidelines to deal with.
· Higher scrutiny. Google pays much closer attention to ads in regulated and sensitive categories, meaning you face closer scrutiny when your ads start circulating. Reports will be investigated quicker and much more strictly, and even minor violations can work against you.
· More ad disapprovals. Similarly, ads are much more likely to get disapproved in these categories. You'll face an uphill battle as you try to get your ads circulating.
· The risk of suspensions. Businesses in these categories also face the risk of frequent, ongoing suspensions. This trend is also worsening; in fact, in 2023, Google Ads suspended more than 12.7 million advertiser accounts – doubling their actions over the previous year.
This makes it much more difficult to advertise effectively and secure a positive return on investment (ROI). Additionally, failing to adhere to Google’s advertising policies can hurt your company's reputation and compromise your long-term potential for success.
The most important thing you can do to improve your results in a regulated or sensitive category is to plan for a sustainable, long-term strategy. Every year, thousands of business owners in these categories attempt to fool Google, find clever ways around its policies, and devise techniques that allow them to cheat the system.
These approaches can usually work temporarily. You can cheat your way into the listings and generate some traffic to your landing page.
But inevitably, these techniques fail, and they can ultimately get you blacklisted.
You're much better off taking the slow, steady approach, following the rules even if it means compromising your advertising effectiveness in the short term. Think about the long-term consequences and possibilities of each decision you make.
There is some good news here.
Google isn’t shy about publishing its advertising policies.
If you're willing to do the reading and research, you can thoroughly understand what Google expects from regulated and sensitive categories like yours – and you can easily adhere to the guidelines.
Well, maybe not “easily,” but reliably.
Generally, Google splits content into two types:
· Restricted content. Restricted content is sensitive content that is subject to more regulations. You must precisely comply with requirements for copy, images, website content, and more if you want to remain in circulation.
· Prohibited content. Prohibited content is totally disallowed. You cannot include it without facing significant consequences.
Unfortunately, we can't give you a big list of all the rules you need to follow, as the rules are different for various industries. Some of the most popular industries and categories that face steeper restrictions include:
· Pharmaceuticals and healthcare products
· Weapons and explosives
· Financial services (including cryptocurrencies)
· Gambling/games of chance
· Alcohol, tobacco, and similar products
· Political ads
· Adult content and services
While there are certainly commonalities between regulations across these categories, each category has its own unique blend of restrictions and rules to learn. For example, pharmaceutical businesses require formal certification from Google and are only allowed in some countries. In the financial services industry, you'll likely need a specific license, and you'll need to provide adequate disclosures for your products and services.
The more intimately you know these rules and regulations and how they apply to your industry, the more likely you'll be able to advertise successfully. Don't advertise until you're sure you understand all applicable Google Ads policies.
One other important note here: you need to stay updated.
Google isn't stagnant, and its advertising policies are constantly in flux. Accordingly, you need to stay abreast of recent changes and update your ad approaches in line with them.
The easiest way to do this is to subscribe to Google Ads policy updates, but you should also regularly engage in Google Ads forums. If you're lucky enough to have a representative, maintain open and transparent communication with them and stay in touch regularly; they can be a massive benefit for businesses in regulated and sensitive categories.
The more research you do, the better. You need to thoroughly understand your advertising landscape before you try to thread this needle.
· Google Ads policies. Obviously, read and understand Google Ads policies as they relate to your industry. We mostly covered this in the previous section, but it's part of the research you need to do.
· Licensing and certification requirements. Even if it's not specifically required by Google, it's a good idea to get any appropriate licenses or certifications. It's a mark of authority and trustworthiness that might save you if any of your ads are reviewed for potential policy violations.
· Laws and regulations. Similarly, violating any laws and regulations in the country where you're advertising could be grounds for ad removal or account suspension, even if those violations aren't specifically listed in Google Ads policies. Always ensure legal compliance before advertising with Google.
· Competitor advertising. It's also a good idea to research your competitors. It's very likely that businesses similar to yours, in the same category, are already advertising successfully. Look at what they're doing. How are they phrasing things? Which disclosures are they including? Do you notice anything missing? You can learn a lot simply by studying previously successful ads.
· Market research. The success of your Google Ads largely depends on your ability to successfully target and appeal to your demographics. If you're properly informative and persuasive, with relevant messaging to the people you're reaching, you're much less likely to face reports, removals, and suspensions. Accordingly, you need to do a deep dive into market research so you better understand your target demographics and can appeal to them with relevant content. If you don't have buyer personas, develop them. If you don't know what your target audience is struggling with or what they want to, pause your ads until you figure it out. There are no shortcuts here, so do a deep dive into your market research if you want a reasonable chance to succeed.
When creating and preparing new ads, make sure everything is compliant, including your copy, your images, and any of your website content.
Remember that the rules and restrictions vary by industry, but these are some general rules that can help you get started:
· Stick to the facts. Don't exaggerate. Don't embellish. Certainly don't lie. It's important to stick to the facts as closely as possible, even if it makes your ad a bit stoic or “boring.” Purely factual advertising rarely gets removed.
· Avoid prohibited or sensitive terms. Review prohibited and sensitive terms that apply to your industry, and avoid those terms like the plague. Consider creating a list of alternatives that you can rely on instead.
· Be transparent. Be absolutely transparent with your target audience, even if you're forced to reveal things that weaken the appeal of your products and services. Offer disclosures when required, and potentially when not required if they can boost your credibility.
· Adopt a serious, professional tone. Don't play with fire. Your best course of action is to adopt a serious, professional tone across your ads. It's much less likely to be reported, and it will seem more authoritative and trustworthy.
· Eliminate sensationalism. In line with this, eliminate all forms of sensationalism. Graphic or revealing content, exaggerated claims, and other techniques designed to evoke strong emotions are probably going to work against you.
· Focus on using images for context. If you're going to include images, make sure they provide meaningful context. Advertisers sometimes select images based on how easily they grab attention or how exciting they are, but this is a surefire way to fail if you belong to a sensitive or restricted category.
· Include warnings if necessary. If there are any warnings that are relevant to your products and services, include them. More information is typically better in matters like these.
· Leverage the power of AB testing. The more relevant and effective your ads are, the more likely they are to succeed. Leverage the power of AB testing to learn more about what your audience wants to see and how to give it to them.
Don't forget about your landing pages.
These are important to Google as well.
If your landing pages deviate from Google Ads guidelines, or if they contradict what's in your ads, it could work against you.
These are some tips to get you started:
· Keep it relevant. Always make sure your landing page is completely relevant and in line with whatever is included in your ad. If users click your ad and find something unexpected, unpleasant, or otherwise jarring, Google might take action.
· Issue disclaimers and warnings. This is an opportunity to double down on disclaimers, warnings, and important disclosures. Err on the side of caution and make these prominent to show that you're in full compliance with both Google Ads policies and laws in your area.
· Make your business information accessible. Make your business information transparent and accessible. Offer your brand name and business location information, and give visitors some way to contact you, preferably via phone and email. It's a sign of trustworthiness and it can proactively resolve potential disputes.
· Be straightforward and transparent. Everything on your landing page needs to be straightforward and transparent. Follow the same rules you did for your ads, and avoid exaggerations and sensationalism.
· Double check Google Ads requirements. Always double-check Google Ads requirements when constructing your landing page. You should fulfill or comply with each item on your landing page to be safe.
You've already done significant market research, so make sure you apply it correctly. Target your audience very specifically so that your messages are only shown to people for whom they are relevant. If someone outside the scope of your target demographics sees your ads, they'll be much more likely to issue reports – and your ads will be much more likely to be removed. It's especially important to target people in the right geographic area.
There are some Black Hat techniques designed to circumvent Google Ads rules and regulations, or otherwise give you an unfair advantage in a sensitive or restricted category. These techniques typically violate Google policies and are largely considered unethical by the advertising community.
One of the most prominent examples is cloaking. Using one of several techniques, cloaking can allow you to advertise to audiences with content different from what you showed Google for approval. It's obvious why this is potentially beneficial, but it's also obvious why this is unethical.
As you might imagine, these techniques can work temporarily. They can give you a significant short-term advantage, allowing you a better strategic position and potentially more ad opportunities. However, if you use them, you could get your account suspended, or even permanently blacklisted. Even if you evade that, you could ruin your company's reputation and jeopardize your long-term results.
Do not follow these strategies. If a PPC agency recommends any such strategies to you, fire them.
They simply aren't worth it.
Navigating the world of Google Ads isn't easy.
In fact, it's stressful and incredibly difficult if your business happens to belong to one of these sensitive or restricted categories.
The good news is it's much easier to be successful when you work with a PPC advertising agency that has experience creating and managing ads for a business like yours. We're deeply acquainted with all the rules and restrictions you need to worry about, and we know how to make target demographics like yours convert.
If you’re ready to get started with a free consultation, contact us today!
