Tracking Your Google Ads ROI: A Comprehensive Guide

August 5, 2024 | Caroline Turner

Tracking the return on investment (ROI) of your Google Ads campaigns is crucial for understanding their effectiveness and ensuring you’re getting the best value for your advertising spend. Here’s a simple guide on how to track the ROI of your Google Ads campaigns.

Set Clear Goals

Before you can measure ROI, you need to establish clear goals for your campaigns. Are you aiming to increase sales, generate leads, or drive traffic to your website? Knowing your objectives helps you determine what to track and how to evaluate success.

Use Conversion Tracking

Google Ads provides a built-in conversion tracking tool that helps you see what happens after a user interacts with your ad. Whether it’s making a purchase, filling out a form, or calling your business, setting up conversion tracking is essential. Here’s how to do it:

Sign in to your Google Ads account.
Click on the tools icon in the upper right corner and select “Conversions” under the “Measurement” section.
Click the plus button to create a new conversion action.
Choose the type of conversion you want to track (e.g., website actions, phone calls, app installs).
Follow the setup instructions and install the conversion tracking tag on your website.

Link Google Analytics

Linking your Google Ads account with Google Analytics provides a deeper understanding of user behavior on your website. Google Analytics offers insights into how users who clicked on your ads interact with your site, such as pages visited, time spent, and actions taken. To link your accounts:

Sign in to your Google Analytics account.
Click on Admin and navigate to the “Property” column.
Select “Google Ads Linking.”
Follow the prompts to link your Google Ads account.

Calculate Cost Per Conversion

One of the simplest ways to track ROI is to calculate your cost per conversion. This metric tells you how much you’re spending to achieve each goal. To calculate it, divide the total cost of your Google Ads campaigns by the number of conversions. For example, if you spent $1,000 and received 50 conversions, your cost per conversion would be $20.

Measure Revenue and Profit

To understand the financial impact of your campaigns, you need to measure the revenue generated. If you know the average value of a conversion (e.g., the average sale amount), you can multiply this by the number of conversions to estimate revenue. Subtract your ad spend from this revenue to determine your profit. Here’s a basic formula:

Profit=(Number of Conversions×Average Value per Conversion)−Ad Spend

Monitor Key Performance Indicators (KPIs)

Keep an eye on key performance indicators (KPIs) that reflect your campaign’s health and success. Important KPIs include:

Click-through Rate (CTR): Measures how often people click your ad after seeing it.
Conversion Rate: The percentage of clicks that result in a conversion.
Cost per Click (CPC): The average amount you pay for each click.
Cost per Acquisition (CPA): The cost of acquiring a customer through your ads.

Regularly reviewing these metrics helps you identify trends and make informed decisions about your campaigns.

Use Attribution Models

Google Ads provides different attribution models that show how various ads and interactions contribute to conversions. The “last click” model credits the conversion to the last ad clicked, while the “data-driven” model distributes credit based on user behavior data. Choosing the right attribution model helps you better understand the customer journey and optimize your ad spend.

Regularly Review and Adjust

Tracking ROI isn’t a one-time task. Regularly review your campaign performance and adjust your strategies based on what you learn. If certain keywords or ads aren’t performing well, consider reallocating your budget to higher-performing areas. Continuous optimization is key to maximizing ROI.

Consider Using a Google Partner Agency

If tracking and optimizing your Google Ads campaigns feels overwhelming, consider partnering with a Google Partner Agency. These professionals have the expertise and tools to manage your campaigns effectively, ensuring you get the best possible ROI. They can provide detailed reports, actionable insights, and strategic recommendations tailored to your business needs.

To dive deeper into Google Ads, read our other Google Ads blog articles. Or if you’re interested in partnering with STORY to optimize your current Google Ads or create a new campaign for you, read more about our Google Ads agency services.

Caroline Turner

Meet Caroline Turner, one of our Marketing Managers here at STORY. Caroline leverages her bachelor's degree from Anderson University to drive impactful digital marketing campaigns. Skilled in strategizing, implementing, and optimizing Google ads, programmatic campaigns, and social ads, she plays a pivotal role in managing select marketing accounts and enhancing our clients' digital presence.

Posted in Google Ads