Maximize Your Google AdWords ROI
Feb 07, 2020 ● 4 min read
Google AdWords ROI is the only way to see the real effect search engine advertising has on your business. Although not easy to track, it’s worth the effort as it shows whether your online marketing investment is paying off.
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What Is Google AdWords ROI?
ROI stands for Return on Investment, so when it comes to Google AdWords, it’s the profit you make from your Google ads as opposed to the money you spend on the same ads. That’s why it’s crucial that you track it all the time.
To calculate it, you need to subtract the overall cost (cost of goods sold) from the revenue, and then divide it by the overall cost (cost of goods sold.)
Let’s say you spend $50 to produce your product and you sell it for $100. Thanks to Google AdWords, you sell 5 of these products. So, your total sales are $500, and your Google AdWords costs are $150. In that case, your ROI would be %25:
($500 – ($250+$150))/ ($250+$150) = %25
In order to measure your ROI, you need to monitor your conversions. Google AdWords ROI is a crucial measurement for advertisers to know how their ads are contributing to their business.
How to Maximize Your Google Adwords ROI
Many advertisers think that Google AdWords is just too expensive or not cost-effective. But, would thousands of companies spend millions on AdWords every month if this advertising platform doesn’t work? We don’t think so.
What’s important is to know how to create your ad campaigns instead of picking something and hoping it will work while your money is being wasted.
It takes looking a little deeper and putting in more effort to get a positive ROI no matter the size of your budget.
Here are three things that can help you increase your ROI.
The Cookie Monster Formula
This formula works for every business whose products or services are searched on Google. There are three steps to using this strategy.
Step #1 – Find the best five keywords for your service or product
Step #2 – Write two ads with those five keywords
Step #3 – Create one landing page that’s relevant to both ads
5 keywords + 2 ads + 1 landing page = High ROI
- But, before you can implement this formula, you need to know your CPA, how to structure your campaign, and how to break your brand or business into service or product “themes.”
- Cost per Acquisition or CPA shows the maximum budget you’re willing to pay to get one sale, one lead, etc. First, decide how much your lifetime customer value is (how much one average customer is worth to your business over their lifetime.)
- Next, determine the ad budget you’re willing to spend to acquire that one average customer. CPA will help you see if your campaign is making a profit or not.
- Use AdWords conversion tracking to discover your cost per sale/lead for each keyword, ad group, and ad in your account.
After determining your CPA and installing conversion tracking, you’ll recognize unprofitable ads, keywords, or ad groups. To make all parts of your campaign profitable, remove the ones that go over your CPA or optimize your sales funnel and ads.
The next thing to do is to ensure each ad group has one specific theme. If your business offers three different services, each of them should have its own ad group. Think about the specific services and products you offer and group them into their own ad group in your account.
You can create separate ad campaigns based on the location of your service. Using location-specific keywords and ad copy can generate more clicks.
After creating a list of all ad groups for your business, you can start implementing the three-step formula.
Step 1 – find the specific keywords for your product or service people are searching for using the Google Keyword Planner, and add them to your ad groups. They should be extremely related to the service or product you are offering to prevent wasting your ad budget.
You don’t need millions of clicks from the wrong audience, but clicks that have high chances to convert into sales.
Step 2 – write your ad copy in a way that searchers click through to your website. Don’t forget to a/b test two ads in each ad group if your ad groups are getting high traffic > 500 conversions a month.
Also, make sure you have an AdWords stopping rule. After the competition of one round of a/b testing, pause the ad version with the lowest conversions and test a new version to beat the winning version of the previous test. If you want to aim for big wins (+50%), split test entirely different ad copy. In this way, you’ll improve your ads and get more clickers.
Step 3 – make sure each ad group in your campaign has its own specific landing page. In this way, those who will click through to your landing page won’t find your home page or some generic page that lists all your services, but a landing page with information that’s 100% relevant to their search.
Understand Your Quality Score
Your Quality Score is crucial for the cost-effectiveness of your Google AdWords campaign. If you don’t provide a high-quality experience, Google will make you pay more per click. Google determines this based on the following factors: click-through rate, keyword relevance to its ad group, the performance of your landing page, and the ad text relevance to searchers.
The worst Quality Score is 1 and the best is 10. Having a high-Quality Score means you’ll pay less per click and your ads will get a better place. This, in turn, will increase your ROI.
Reevaluate Targeted Ad Groups
This includes reviewing your Google ad groups. Identify which keywords in certain groups have low-quality scores and move them to a different ad group, or remove them. Also, you can pull a report to find out the actual phrases that trigger your Google ads and add them to your keywords.
Measuring your ROI is important to make better decisions when it comes to your ad budget, and to find out the profit of your Google ads. The higher the ROI, the better. Therefore, take these three tips into consideration to maximize your Google AdWords ROI.