How to measure success in Google Ads
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Online ads can be a powerful tool in a small business' modern marketing toolkit. One of the great things about using Google Ads Smart campaigns is how easy it is to measure your success and understand how your ads are performing — so you can continuously improve your approach.
In this lesson, you’ll learn which metrics are most important for measuring the success of your ads, and what steps you can take to keep your ads working for you.
Which metrics matter most?
In this video, you’ll learn what return on investment (ROI) and cost-per-click (CPC) are. Learn more.
When people discuss online ad performance, they talk about two key terms most often: Return on investment (ROI) and cost-per-click (CPC).
Let’s take a look at what ROI and CPC are, why they’re important, and what each one means for your business.
Return on investment (ROI)
ROI is a pretty simple measurement: how much you spent versus how much profit you made, calculated as a percentage. It’s a basic and important way to quickly understand if your ads are making more money than you’re spending on them, and if they’re worth the time, effort, and budget you’re putting into them.
To calculate ROI, simply take your sales revenue, subtract your ad costs, and then divide by your ad costs and multiply by 100.
Sarah spends $100 on ads for her tutoring business.
She makes $200 from selling two tutoring sessions via her ads.
Taking her total revenue ($200) minus the cost of her ads ($100) gives her $100 in profit.
$100 divided by 100 equals 1. 1 x 100 = 100.
Sarah’s ROI was 100%.
This means that for every $1 Sarah spent, she made an extra $1 in profit.
A positive ROI means your ads are bringing in more money than you’re spending; they’re generating profit. The higher your ROI percentage, the greater the profit — and the better your ads are doing. But if you have a negative ROI, your ads might still be stabilizing or it may be time to refresh your copy and keyword themes. Results take time, so don't panic if at first your ROI is low. It can take a few weeks for your ad performance to stabilize while we discover what works best for your business.
CPC measures how much you’re spending for each individual click on your ads using a basic ratio. It’s an important measurement because it helps you quantify and put a price tag on the exposure your ads are generating for your business.
To calculate CPC, simply take the total amount you spent on your ads and divide it by the number of clicks those ads drove to your website.
Carlos spends $100 on ads for his dental practice.
His ads drive 50 clicks to his website.
100 divided by 50 = 2.
Carlos’ cost per click is $2.
Google Ads Smart campaigns will also show you your CPC per ad in the campaign dashboard.
What to look for in your metrics
So, what should you do with these numbers, and what are you looking for? One great idea is to track them over time. Generally, your ROI should increase over time as your ads get better and better at reaching the right audience and convincing them to spend money with your business.
CPC is a little trickier. It’s usually okay if your CPC goes up over time as long as your ROI is also increasing. If you’re still generating more and more revenue from your ads, you may find yourself spending a little more per click to reach the right audience. That’s okay — if more of those clicks are turning into conversions, your profit is still increasing and your business is still growing because of your ads.
How to make your ads work even harder for you
Your performance is designed to improve over time as Smart campaigns learns the best ways to connect with your audience. But you can help, too.
In this video, we’ll walk you through how to optimize your campaigns. Learn more.
Here are five things you can do to make your ads work even harder for you.
1. Check your keyword themes and search phrases
When you set your ad live, we recommend choosing 7-10 keyword themes — these will be used to show your ad when a person searches certain terms in Google.
Over time, Smart campaigns will create a list of search terms that cause your ads to appear. You’ll want to make sure these search terms are a good match for the types of products and services you offer, so check them often and deselect any terms that aren’t a good fit.
2. Check the locations where your ads are running
People all over the world use Google, but you may only want to reach people in the area you serve. If your Los Angeles-based bakery only delivers locally, you don’t need or want to spend money showing ads to shoppers in Boston.
Check your Smart campaigns settings and make sure your ads are only appearing to people in the areas you serve.
Check your campaigns and make sure your ads are only appearing to people in the areas you serve.
3. Check the times your ads are running
The internet is always on, 24/7. But you know your business best — if there are certain times of day or days of the week when most people are looking for you, you can change when your ads are shown.
For example, if you are trying to drive phone calls to your business and your business is closed on Sundays, it probably isn’t worth showing ads on Sundays when no one is there to answer the phones. You can use ad scheduling to adjust when your ads are showing up to make the most of those clicks.
4. Liven up your ads
To help your ads rise above the general online “noise” your customers search through every day, it’s important to catch their eye with great design and interesting ad copy.
Check out our lesson on writing great ads, and remember: Smart campaigns automatically test different combinations of your text and images to see which ones work best. So go ahead and create lots of different, imaginative versions of your ad text.
5. Double-check your website
Remember, when someone clicks on your ad, it will take them to your website — so your website needs to be ready to help them complete the sale, inspire them to visit your location, or do whatever else you’re hoping potential customers will do after they click on your ad.
Make sure business hours and contact information are up-to-date on your website, and that you tell people exactly what you offer and how they can connect to learn more or make a purchase. It’s also important that your website is easy to navigate, mobile-friendly, and loads quickly.
Online advertising is a great way to help you reach more people and attract more customers.
And by following these tips, you’ll be ready to measure the success of your online ads, understand what the numbers are telling you, and make the changes necessary to help your business thrive.
5 Tips to optimize your Ads
To measure the success of your Google Ads campaigns, calculate your ROI (Return on Investment) and CPC (Cost per Click) and track these numbers over time. Then, try these 5 tips to optimize your ads further.
Confirm your keyword themes and search phrases
Check the locations where your ads are running
Check the times your ads are running
Liven up your ads with interesting copy or visuals (Tips)
Make sure your website is up to date and easy to navigate