Google is the biggest internet search provider in most online markets and responsible for generating over 80% of desktop search traffic.
Businesses vie for Google rankings by optimizing their website for organic search so they can rank higher in the search results. But not everyone has the time or resources to do that, as it can take months for a website to climb up the search results organically.
The only way to dominate search results from the get-go is by running a Google ad campaign that shows your site right at the very top of the search results. You can also choose to display your ads on other websites in the Display Network and the AdSense program.
However, to run an effective ad campaign, you have to be quick and definitive in the way you approach it. Simply creating an account, bidding on ads, and then letting the campaign run on autopilot doesn’t help. You have to be vigilant in tracking your campaign progress and adjust according to the changing trends.
It is best to be on top of all the trending searches and keywords to truly take advantage of this platform. According to reports, the advertising revenue of Google sites amounted to US$123.83 billion in 2020, which highlights its importance and impact on businesses.
We’ll explore all the reasons why it is a good idea to update your google ad campaigns. But here’s the deal: all these reasons are dependent on the way these campaigns work.
Google ads are essentially an auction system, where your ad campaign’s success depends on the quality of your ad and the amount you bid. And this happens every time a user searches for a keyword that you want your ad to be associated with.
The following factors affect the quality score of your ad:
You can see that your ad’s quality, relevance, and appropriateness play a significant role in getting it a high-quality score. It is essential to achieve this metric because Google or search engines often lowers the cost per click for ad campaigns with a higher quality score and gives them higher-than-usual exposure.
Before we delve into the factors that affect the frequency with which you should update your campaigns, let’s look at the reasons why you need to do so in the first place.
In the recent past, Google has made several new feature additions to AdWords and revised its ad platform. This includes new extensions addition or altering the ad format, which helps businesses with their marketing strategies.
Naturally, if you don’t use these while the rest take advantage of them, you are bound to fall behind.
You might get complacent about your campaign’s success and believe it’s alright to let it run on autopilot, but your competitors think differently. They are always trying out new features, testing their search ads, and expanding their campaign budget. This can give them an edge over you if your campaigns aren’t evolving right alongside theirs.
While previously, people used their laptops and desktops to search for something, they now use their smartphones or Google devices. As a result, their phrases and also the way they search continuously change. If you want to keep up with this progress, it’s essential to update your Google ad campaign regularly.
Make every click on your ad count towards your overall marketing and lead generation goals. Take a more informed approach to running a campaign so you know that only targeted audiences click on your ad.
It is essential to go over the search terms and find ones that have the potential to trigger the ads you post. Sometimes specific phrases provide barely any value addition to businesses. You can label these as negative so that they don’t appear in the future keywords list.
It might be hard to believe, but even huge businesses aren’t immune to such issues. Brands spend tons of money on online promotions, so prospects are informed about them. However, when prospects get the coupon, they find out it has been expired.
For instance, a potential customer could click on a sale ad for your brand but find out it has long ended once it opens up.
Clicks on ads don’t necessarily depict a campaign’s success until you get the visitors to take action. It is essential to test your ads to see if they are working effectively or not.
When you improve your google ads ctr (click-through rates), you get more leads and improve your ads’ Quality Score, lowering the cost you entail per click.
The frequency with which you update your Google Ad campaigns depends on your budget and the industry you are in. Depending on these factors and how long you run your ad campaign, you can update your ad campaign weekly or stretch it out over more time.
Here are a few factors that affect the frequency of your Google Ad campaign update.
The amount of money you can spend on your Google Ads determines your activity. You are likely to dedicate more time and effort to your ads if you spend $70,000 monthly rather than $700.
Like any project you start, you need to put in extra effort at the beginning of an ad campaign, as it takes more work to establish it and ensure its success.
You get to decide on the target keywords you want to use which have the highest potential to convert. Additionally, you make new ads and update the landing page they are posted on. But even before doing any of that, you need to choose a bidding option for your ads.
Although Google stresses using an automated system, you shouldn’t start out this way because you need data to work effectively. As a beginner, you should start with manual bidding and then move to the automated one.
The number of leads you get to your business is an indication of the success of your campaign. If you have many leads, your campaign is already a success, and you don’t have to be highly active.
Having said that, you cannot leave your account, no matter the success rate of your campaign, because more success gives you the opportunity to build on it.
However, if your ad campaign isn’t performing well, you have to get involved in it to work on the issues and bring it to a place where you envision it. Consequently, you need to test your Google ads and keyword choices thoroughly.
In fact, with Google Ads, you can check the optimization scores for your campaign, courtesy of Google. In case you get a low score, you’ll know you have to work on it.
One of the most significant factors in determining the frequency with which you update your campaign is the number of keywords you target.
When you target many keywords at one time, it generally means you have several ad group and a significant quantity of ads. Additionally, more keywords translate into having more data for review.
Here are a few things you need to do with your monthly ad campaign regularly:
Initially, if you decide on manual bidding, you should monitor the positions of your keywords. Google no longer shows the average keyword position but gives the top search. This shows the frequency with which Google ads appear in the top spots over organic listings.
It is essential to be a part of this top ad group, if not the top spot.
It is essential to keep an eye out for new keywords that you can test, which is convenient to do so through Google’s plus sign option, which displays a list where you can pick new phrases from.
However, be aware of the fact that using new keywords through this method will get you irrelevant clicks because of the broad match.
Your ultimate campaign goal is to either create more brand awareness or get new leads. If it is to get more leads, then ensure accurate tracking of conversions. You need exact numbers, whether it is in the case of tracking calls or goals.
It is vital to choose the correct conversion attributes to get the type of leads you are looking for. If you don’t get the results you are looking for, it’s time to alter your campaign.
No matter how amazing your Average click-through rate (CTR) may seem, it can always be improved. You can have an ad groups consisting of a responsive ad and three expanded text ones.
Every month introduce a new ad and pause the ones that perform the least, which will actually help you beat your best ad, instead of the paused one.
It is always best to pause an ad with at least a hundred impressions. With a high-budget campaign that gets thousands of impressions daily, you can introduce a new ad in every group every few weeks.
Google’s recommendation about your campaign and score provision is an essential feature that you can review. You shouldn’t accept all of them, but it is beneficial to consider any new keywords it gives or features you didn’t know of.
Review your search term report regularly to find any new phrases to use and eliminate one’s that don’t do well.
Add such words as negative keywords to prevent them from recurring. Review this several times a week initially; then, you can space it out over months once you get the wasted spend.
If you’ve been inactive for a while, Google can take action for you.
New Google ads are usually suggested under recommendations. Depending on your landing page settings, these can be automatically added to your ad campaign. It might seem like a helpful technique, but it is common for these Google ads to be terrible. These Google ads generally use the company name as the first title and don’t fill in the other ad elements.
You might not know this, but Google also tests other recommendations addition, and you can find keywords that you haven’t added to your account.
Even if you choose automated bidding, there’s still a lot that needs to get done. This includes monitoring your search terms, reviewing recommendations, and developing new ads.
Furthermore, it would be best if you kept an eye on your monthly budget and conversion costs. You should get improved results over time; otherwise, you should review your automated bidding settings.
To run an effective marketing campaign, you have to monitor, review, and alter accordingly continuously. This includes simple actions like site audits or bigger ones like ad alterations.
Google Ads is a robust platform that gives businesses a chance to generate more leads, track their ad performance, develop strategies to stand out from their competitors, and eventually boost sales.
However, as straightforward as this approach may seem, you have to be active in how you use it. It is essential to constantly keep an eye on new trends, keywords, and searches and tweak your ad campaigns accordingly, especially if they aren’t running successfully.
You can never be complacent with your advertising techniques, and Improve your Google Ads ctr is one of the best ways to stay above your competition.
If you are new to Google Ads, rest assured that you’ve chosen the right PPC ad platform for your business.
Going by leading PPC marketing KPIs, Google Ads offers some of the highest conversion Value and ROI.
Still, it is important to truly understand what you are getting into before spending/ad spend significant amounts of money and time on a Google Ads strategy.
It takes much work to get best results that can be studied and analyzed to tweak the process for better outcomes.
An essential part of this endeavor is to estimate, track and dramatically improve conversions.
A conversion value is any action taken by a user at your behest. For example, they request a demo, sign up for a trial, buy something or submit their emails because that’s what you drive them to do.
This article will discuss the right way to estimate conversions in Google Ads.
But before that, let’s get familiar with the basics.
Paid marketing is one of the easiest ways to let your prospects discover your products, service, or business through digital advertisements on the SERPs.
Pay-Per-Click (PPC) or Pay-Per-View (PPV) options allow businesses to purchase ads that are great at targeting the right audiences. Since it is an inorganic way of getting credibility, ranking, and ad traffic for your business site, it reaches your audience on a priority basis so that you don’t have to wait for your customer to find you through the search engine. Your website or product advertisement will pop up on the SERPs as soon as a related query is entered.
Google ads work because more than 70 percent of users prefer to see ads personalized according to their interests. In addition to that, over 65 percent of searchers have no qualms about clicking on paid ads. That’s why smart PPC campaigns focus on people who are actively looking to buy and not merely researching a product or service.
As businesses continue to battle for rankings, conversion value, automation, and personalization, the stats clearly show that paid marketing technique is the quickest way to go!
Paid marketing includes the display of ads on SERPs (search engine results pages) like Google and Bing and social media channels (like Facebook).
Businesses and marketers select a medium for advertisement –i.e., Google Ads or Facebook. Then they define their targeted audience on the web. This audience is categorized by demographics, preferences, age, location, search entries, previous purchases, and pages visited.
The method is commonly known as PPC (Pay-Per-Click). This means the advertiser has to pay for each click on their advertisements. To place an ad for the SERPs, a business must pay a certain amount; once the payment is made, the ad campaign goes live. Your ad starts to display on the SERPs whenever a related term or keyword is entered into the search bar on Google.
Now that you know all about paid ads and how they work, here is how Google Ads work and what it offers to track more conversions and estimate the total conversions.
Google AdWord’s, now known as Google Ads, allows marketers to create ads and run them on the Google search engine to reach their audience. It works for PPC pay-per-click advertising, where you have to pay for every click your visitors click.
The rate-per-click is always varying; depending on several/many factors, marketers only have to set their budget for their campaign. The ads remain live until their budget ends, and it ends when the entire amount is used up.
Google Ads is a robust program, and it gets even more potent with every update. Since it has been improvising with the latest technology and AI, it also allows you to track your conversions. It is the only medium for creating highly profitable Google Ads and tracking conversions.
The fantastic conversion trackings feature of the program allows you to post and track the ad metric in the most simplified form. It offers various data for the business to optimize their next ads according to the data retrieved from a previous ad campaign.
One thing that plays a significant role in PPC ads is conversions. Without Google Ads and its conversion trackings installed, you will never know how many clicks you got each day or from each ad campaign. Also, it will tell you how many clicks resulted in leads, sales, and so much more. You can use this information to optimize your next campaign with utmost perfection.
When running a PPC campaign, businesses need to track and estimate their conversions after each movement. Here is why:
Ever since the industries have started to grow with digitalization, Google has been trying to bridge the gap between businesses and their goals with intelligent data and insights. When it comes to conversions with Google tools, Google has all the knowledge of the universe. Also, with the innovating AI and machine learning Google has become even more powerful and more intelligent over time.
Thus, working with Google tools is getting intellectual data from the entire population of the world. It records all the user behavior history and so much more. This data comes into play when you place the ads with the targeted audience and reap the result without any effort. It also offers smart tracking tools for paid ads, which helps estimate the conversions a business gets from each paid campaign.
Since all of our devices are linked with Google and have Google accounts logged in, it can access all your information from your credentials to your location. Considering the power it has, clicks are just a minor thing, which Google can easily track. This is how it gathers all the conversions that happen. Even if you open an ad through your mobile browser but make the purchase from a desktop, Google will know it!
This is where the conversion trackings tool comes into play. We went over numerous things to emphasize the importance of the tool and how it helps you determine the estimated rate of conversions. Once you run the ad, you can get to know about each click, lead, conversion value or sale, based on your own criteria of conversions.
To better utilize the conversion trackings tool, you need to understand each of the above things in this article. Then decide on the actions that you count as a conversion. Whether it is when someone visits your website, call you, sign up for a newsletter, call you, and fill out an online survey or when someone contacts you online.
Here are the three sources you can use to identify your conversion value criteria:
Estimating conversions today is easier than ever before. Here is how you can do it with Google Ads resources:
Cross-device conversions are noted as a user clicks an ad on one device but completes the conversion value on another. You can use the insights extracted from Google Analytics based on user data.
This data comes from users who have either signed in to their Google analytics accounts and/or have their ad personalization feature turned on.
Google Ads exports this cross-device and same-device data from analytics to Google Ads campaigns and shows it to you through the conversion trackings tool. Later on, you can use this data for your PPC bidding. However, to automate the conversion exports (even with AI) to Google Ads, you can Activate Google Signals and Import the Analytics in Google Ads.
To track the webpage conversions, you need to add a conversion trackings tag to your website. This tag will gather all the insights of the click-through rate. It will track the activity on your ad and the website and let you know if someone clicked on your ad and visited your website. Also, it follows the activity of the users when they visit your website and complete a conversion value action.
These conversion actions may include purchase, sign-up, contact information form, call, reaching out to the support for further assistance, or anything you list as valuable.
However, this only happens when you create a website conversion actions in your Google Ads account, you’ll get a conversion trackings tag to add to your website. Also, you will need to identify a conversion value page on your website, which can be a thank you page, after a completed action.
This resource helps you track the CTA usage that involves a call on a number mentioned on your business website.
You can use Google Analytics/Phone Analytics and reporting to enable the instant tracking of website call conversions. By doing this, you will be able to access insights when someone uses your on-site number to call you after clicking any of your ads.
This feature will help you track ad leads generated by phone calls to your website number.
These phone call conversion action will help you see how efficacy your ads lead to phone call conversions. Since the number is linked to your website and the ads, you will be able to track all the leads through conversion action tracking.
Also, you with this source, you can analyze the keywords, ad groups, ad, and campaigns that lead to more call conversions.
For setting up call conversion actions, you will need a Google Ads account, a conversion actions, and the addition of the conversion action tag to your business website.
If you use Google Ads to promote mobile apps, you can use Google Ads’ conversion trackings tool for download tracking. It will help you how many downloads do your ads lead to.
The tool will track when your ads are clicked, leading to app installations and in-app activity. However, due to the difference in OS, iOS tracking might be impacted. So using Google Analytics is essential. You would also need to keep track of the apple framework’s updates to ensure maximum conversion trackings.
You can track mobile app conversions with Firebase or import mobile app conversions from a third-party app like analytics tools or Google Analytics.
You can track various types of mobile app conversions, including:
Google Ads is a powerful tool that enables you to run paid ad campaigns and offers insights through Google Analytics, gathered all in one place. Also, it allows you to analyze the different rates of conversion through all mediums that display your paid ad campaign.
However, if you are still wondering the right formula to estimate the total conversions, here it goes:
You only need to track and conclude all of the conversion mentioned above sources with the help of Google Ads. And then, you need to add them all to estimate the total conversions.
Estimated Total Conversions = Current Online Conversions + Cross-Device Conversions + Website Conversions + On-site call conversions.
Given the fact, these complexities can lead you to a massive fiasco if you set up a PPC campaign based on inaccurate data and insights. Thus, analyzing and estimating your total conversions is critical for a business and its budget. However, if you need to run a Paid Ads campaign, you must seek the help of a professional to avoid any financial damage.
Succeeding in eCommerce PPC doesn’t merely involve selling quality products.
True, that’s critical (you won’t have many loyal customers if your products don’t offer actual value, after all), but it’s not the only way you can boost sales.
In a competitive marketplace, you need to stand out in the crowd by running pay-per-click ad campaigns through Google Or PPC ads and Amazon.
You also need to apply tested strategies that align with user behavior.
Consider the following examples.
If you’re trying to grow an eCommerce business with a PPC advertising campaign, these tips will help you achieve your goals.
Let’s get the obvious tactics out of the way first! Different types of Google Shopping ads offer different features and serve different purposes. Google Shopping Ads allow you to showcase your products and directly encourage users to purchase them. They also have a relatively strong chance of showing up as sponsored links when users perform relevant Google searches. Naturally, they’re ideal for eCommerce PPC.
Depending on the nature of your business, some of your products may be more popular among customers during specific times of the year. For example, if you’re a digital marketing /PPC marketing apparel brand, you shouldn’t expect your winter coats to typically sell best in summer.
That’s a basic example. The main point to keep in mind, though, is that you want to be prepared to leverage seasonal trends instead of scrambling to make seasonally-appropriate Google Shopping ads at the last minute. That means even when it’s not winter, you should be developing Google Shopping ads for the products that sell best in winter. You can always make minor changes later before publishing them.
Most marketers understand the value of using the right keywords when designing PPC ads/PPC advertising for Google. However, while including the “right” keywords in your descriptions and ad copy is important, it’s also smart to specify any negative keyword’s you wish to associate with your ad.
Negative keyword’s help you boost sales by telling Google’s algorithm what you’re not offering. This minimizes the chances of users with little interest in your products seeing your ads, thus allowing you to optimize your paid search budget.
For example, maybe you’re selling physical desk calendars. As such, your target audience doesn’t consist of people looking for online or downloadable calendars. Make sure you’re not wasting money advertising to them by including “online calendars” and similar terms in your list of negative keyword’s.
That said, you should keep in mind that just as making a list of keywords involves some trial and error, so does deciding which negative keywords to specify when creating ads. Monitor your eCommerce PPC campaigns’ performance regularly and update your list of negative keywords whenever you come up with new ideas.
With each year, it becomes increasingly common for online shoppers to browse eCommerce sites and make purchases via mobile devices. Remember this when designing your ads. At least some of your PPC ads/PPC advertising should be designed specifically for customers shopping on smartphones and small tablets.
There are various ways you can incorporate mobile-friendly elements into your ad designs. The specific choices you make will at least to some degree depend on what you’re selling. In general, ads that are designed to look impressive and clean on mobile devices strike a balance between catching a user’s attention with vibrant imagery without overwhelming them. For example, an ad featuring a large chunk of text may be somewhat difficult to read on a small mobile screen. Mobile-friendly ads should instead be designed to convey essential information efficiently and clearly. As always, you should also A/B test different ads to get a better sense of which yield higher levels of engagement with mobile device users.
You may already appreciate the importance of creating PPC ads/PPC advertising to highlight sales when you plan on running them. A general rule of thumb that tends to hold true states that when potential customers are told they can save money if they act fast, they’re more inclined to make purchases.
However, along with buying items when they’re on sale, your customers may be able to save money in various other ways when buying your products. Perhaps if they spend a certain amount of money they’re rewarded with a discount. Maybe you offer discounts to users when they sign up for your email list. Or, you might have a customer loyalty program that allows repeat customers to save money.
When planning eCommerce PPC campaigns, review the products you’re selling and make a list of any promotions, discounts, and other such money-saving options that may be associated with said products. Whenever it makes sense to do so, touch on these money-saving opportunities in your ads. You’ll likely find that sales increase accordingly.
Additionally, even when an item isn’t necessarily available at a discounted price, it’s still often smart to mention its price in the title of an ad anyway. While this isn’t a universal rule, as there are instances when mentioning the price in the main ad copy may feel forced, in many instances it’s wise to let a potential customer know how much you’re charging for a product right away.
The fact that a lead considered buying one of your products but ended up not actually making a purchase doesn’t always mean they’ve decided for good that they’re not interested in buying a product. There are many, many reasons online shoppers don’t make purchases right away when browsing items. Often, they’re simply distracted. When they click away from a product page, they might tell themselves they’ll complete a purchase later, only to forget to actually do so.
Luckily, these potential sales are by no means lost forever. You can use Google’s Dynamic Remarketing features to show relevant PPC ads/PPC advertising to users who engaged with your brand or products in the past when they visit sites within the Google Display Network. This is an easy but effective way to improve your ROI.
Segmenting your audience and creating different types of Google ads to appeal to different types of customers is one of the most well-known ways to improve a PPC ad campaign. That said, some eCommerce PPC marketers make the mistake of only segmenting their audiences once, then never returning to make adjustments based on what they’ve learned from their eCommerce PPC campaigns.
This deprives them of an opportunity to squeeze more profit out of their ads! When you monitor your PPC campaigns performance, consider if you can glean any new insights regarding audience tastes, behaviors, and other such factors in order to segment your audience even more effectively.
For example, after reviewing a PPC campaigns performance, you might find that leads who live in one particular city respond (whether positively or negatively) differently to certain PPC ads/PPC advertising when compared to those from a different city. If this was a behavior you hadn’t predicted when first segmenting your audience, now that you’re aware of it, you can segment your audience even further to boost sales.
Another mistake that’s too common in digital marketing/PPC marketing? Only creating new Google ads when you “need” them.
For instance, you’re well aware of the fact that you should create new Google ads when promoting new products, when running sales, and when your existing Google ads are stale and simply need to be refreshed. However, it’s worth remembering that there is no such thing as a truly “perfect” ad. Even if you’re not completely sure how right now, it’s almost certain that each and every one of your ads could be improved upon in various ways.
Constantly creating new Google ads should be one of your top priorities. True, you can’t devote all your time to generating ads, as doing so will prevent you from focusing on other important business tasks, but you should probably focus on creating new ad content when you have the time to do so more than you currently are.
Creating new Google ads naturally gives you more chances to test them. The more ad variants you test, the more you’ll learn about which strategies are most effective. That said, even when you aren’t actively running all the news ads you’ve recently generated, consistently engaging in the ad generation process will ensure those creative muscles remain strong.
Additionally, it’s helpful for very practical reasons to have a large number of Google ads available on the backburner. When you reach a point where it is necessary to incorporate new Google ads into your PPC campaigns, you’ll already have plenty of unused content to experiment with.
The Internet is brimming with potential distractions. Again, the list of distractions that could prevent an otherwise interested lead from making a purchase is extremely long. When a potential customer clicks on one of your ads, you typically have a very limited amount of time to make a sale.
Keep this in mind when reviewing your current PPC ads/PPC advertising and generating new ones. Your ads should send leads directly to a product page (or other page from which they can easily make a purchase) right away. If there are too many steps between the point when someone clicks on an ad and the point where a purchase is complete, you’re losing out on sales.
Researching your competitors’ keywords and using them in your own PPC ads (when it makes sense to do so) is generally a smart online advertising strategy. That said, there are certain keywords the competition may be using that you should not incorporate: branded keywords.
It may be tempting to use a competitor’s branded keywords in your PPC ads not because you want to deceive a potential customer by making them think you’re selling another brand’s products, but simply because you want to target customers who are interested in brands similar to your own. For instance, maybe you’re selling a more affordable alternative to a popular product, and you want to let potential customers know about how much money they could be saving if they bought an item from your brand instead of the competition.
The problem is, branded keywords tend to only be valuable when used with the relevant brand’s ads. The attention your PPC ads receive when you rely on the competition’s branded keywords will primarily come from low value leads who are probably already planning on buying an item from their chosen brand. You’ll have little success convincing them to buy your products instead.
Properly incorporating branded keywords into your PPC ads in a way that’s ethical is also, well, hard. Even if your intentions aren’t malicious, if a competitor finds you’re using their branded keywords excessively in your own ads, they can complain to Google or any other advertising platform you’re using. The consequences may include account suspension, cease and desist orders, and more.
Some classic eCommerce PPC tips will always be relevant. Some grow even more relevant over time.
For example, today’s online shoppers tend to be very savvy when it comes to their understanding of advertising tactics. Your potential customers know that just because you’re describing your products in a way that makes them sound desirable and valuable, that doesn’t necessarily mean your own description can be trusted.
Surveys often reveal that online shoppers are increasingly prioritizing customer reviews when determining whether to buy products. They may not trust a company to honestly describe a product’s benefits, but they trust other customers.
You can appeal to that trust by including language from real customers reviews in your ads. You don’t need to do so with every single ad you create, but you should highlight customer reviews at least to some degree from time to time.
However, while these tips absolutely will improve the effectiveness of your eCommerce PPC advertising campaigns now, remember that best practices are always evolving and changing.
You need to ensure the success of your eCommerce business by continuing to read blogs like this one. Staying on top of the latest best practices is one of the simplest yet smartest ways to remain competitive.
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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