How to measure the effectiveness of your Google Ads campaigns

A guide to campaign return on investment (ROI) and tracking

How to measure the effectiveness of your Google Ads campaigns

1 Overview

The challenge

Knowing which campaigns offer the best return on your investment is essential to ensuring your marketing plan is a success in new markets abroad. That way, you can focus on investing in the campaigns that work best for you.

Your aim

To measure your return on investment (ROI) of your Google Ads campaigns to make the most of your marketing budget.

2 Measuring your return on investment matters

Measuring the ROI on your Google Ads, whether you use it to increase sales, generate leads, or drive other valuable customer activity will help you evaluate whether the money you have spent is making profits for your business.

What is ROI?

Simply put, ROI is the ratio of your net profit to your costs. It is based on your specific marketing goals and shows the real effect that your advertising efforts have on your export market.

To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs: ROI = (Revenue - Cost of goods sold) / Cost of goods sold.

Example

Let's say you have a product that costs £100 to produce, and sells for £200. You sell 6 of these products as a result of advertising them on Google Ads. Your total sales are £1200, and your Google Ads costs are £200. Your ROI is (£1200-(£600+£200))/(£600+£200), or 50%.

What ROI means to you

Calculating your ROI tells you how much money a particular Google Ads campaign has generated. It lets you make informed decisions about how to best spend your marketing budget. Knowing your ROI can help you choose to spend more money on a successful Google Ads campaign, and less on ones that aren’t getting the results you wanted. Using ROI data can also help you tweak and improve less successful campaigns.

Getting the measure of your ROI

To find your ROI you will need to measure the customer actions which are valuable to you in your new market. These could be purchases, sign-ups, web page or app visits, leads, or video views. These actions are called conversions.

You can track how many clicks lead to conversions with the free Google Ads conversion tracking tool. Tracking this can also help you determine the profitability of a keyword or ad, and track conversion rates and the cost for each conversion.

Once you've started to measure the conversions from your new export market, you can begin to evaluate your ROI. The value of each conversion should be greater than the amount that you spent to get the conversion.

For example, if you spend £10 on clicks to get a sale and receive £15 for that sale, you've made a profit of £5 and received a good return on your Google Ads investment.

4 Using App campaigns to increase ROI

About App campaigns

As an app advertiser, you want to get your app into the hands of more paying users. So, how do you connect with those people? App campaigns streamline the process for you, making it easy to promote your apps across Google’s largest properties including Search, Google Play, YouTube and the Google Display Network. Just add a few lines of text, a bid, some assets and the rest is optimised to help your users find you.

App campaigns offer two different ways to optimise for your marketing objectives:

Focus on getting more installs

Google Ads will optimise your bids and targeting to help you get the greatest number of new users for your app. The bid you set should be the average amount you'd like to spend each time someone installs your app. As an advanced option in the new Google Ads experience, you can target users likely to install and perform a specific action. For this option, you will still bid for installs.

Focus on driving in-app actions

If your goal is to find more valuable users, and you have the key in-app action tacked as a conversion event, use this option. Google Ads will focus on people who are most likely to complete the specific in-app actions you've set up and selected for this campaign. Set the target CPA (cost per action) to be the average amount you'd like to spend each time someone performs the selected in-app action in your app.

Set up App campaign differently depending on your goal

App campaigns can help you find different types of users for your app. You may want to get installs for a new app or you may want to focus on driving in-app actions.

Set up App campaign differently depending on your app’s immediate marketing goal.

Managing multiple App campaigns

It’s better to set up a new campaign if you’d like to start optimising for a different goal. A new campaign will be better at optimising your bids and ads for an audience who can meet each goal.

If you want to accomplish multiple goals simultaneously, you can set up concurrent App campaigns that may at times compete for similar types of users. To reduce this effect, increase the bid and budget for the App campaign that meets your immediate goal:

1. Build a user base for a new app

If you want to get the most installs for a target cost per install (CPI), create a App campaign that optimises for “Install volume” and targets “All users”.

This set-up will focus on building a user base for your app. As you get more new users, you’ll collect conversion data to identify trends among the more valuable users.

Example: set a target CPI based on value

Say you’re promoting a mobile game. Based on conversion data from similar games that you’ve promoted in the past, you expect 1 out of 10 people who install your game to buy an upgrade in the first 30 days that’s worth £20 in profit. Since 1 out of 10 users is worth £20, you can afford to pay up to £2 per install (or £20 ÷ 10 installs).

Tip

Let Google Ads collect enough conversion data without running out of budget. When optimising for “Install volume”, set a daily campaign budget that’s at least 50 times your target CPI. So if your target CPI is £2, set a budget that’s at least £100.

Find installs that will also perform a specific action

Create a new App campaign that focuses on “Install volume” but targets “Users likely to perform an in-app action” instead of “All users”. Set a target CPI in the more targeted campaign that’s at least 20% higher than the campaign targeting “All users”. It makes sense to pay more for more valuable installs. A bid increase of at least 20% will help Google Ads separate the value between the two audiences.

2. Focus on users who complete in-app actions

Once you’ve decided which in-app action is most valuable to your business, you can find new users who will perform this in-app action for a target cost per action (CPA).

Create another App campaign and set its “Campaign optimisation” to focus on “In-app actions”.

Pick an in-app action that will give App campaign enough data to optimise effectively

A more frequently occurring conversion action gives Google Ads more data to learn how to find new users who will also perform that action. If you don’t have at least 10 different users completing the most valuable in-app action every day, you’ll need to pick another, more common in-app action instead.

For example, if your most valuable in-app action is someone buying an upgrade in your mobile game, but fewer than 10 people complete this action every day for your App campaign, you’ll need to pick another action. You can pick something like adding payment information or levelling up, which is likely going to lead to the upgrade but is completed by at least 10 different users each day in your campaign.

Example: set a target CPA based on value

Continuing with our mobile game example, suppose you want to find more people who will buy an upgrade. The upgrade is an in-app action that’s worth the same to your business every time it happens: a £20 profit. In this case, you could set your target CPA up to £20. You can adjust this amount up or down depending on how much profit and conversion volume you’d like.

Tip

If you don’t know what target CPA to set, start with the CPA from other online campaigns promoting your app. Then adjust your target CPA as you get more data about the value of your users.

Tip

Let Google Ads collect enough conversion data without running out of budget. When optimising for “In-app actions,” set a budget that’s at least 10 times your target CPA. So if your target CPA is £20, set a budget that’s at least £200.

Evaluate performance based on your goal

Make sure Google Ads has enough conversion data – the more data Google Ads has to identify the common characteristics among your desired users, the more consistently it can find new users who fit a similar profile.

You can expect App campaign’s performance to stabilise once Google Ads has collected enough data to confidently identify valuable new users. For example, your cost per conversion metric (CPI or CPA) could vary from day to day but average out to a monthly number that meets your target. It’s ideal to wait for at least 100 conversions before evaluating your cost per conversion.

Account for conversion delay when you evaluate performance – don’t forget to account for the time it takes someone to convert after they click on an ad. This is called the conversion delay.

Because Google Ads attributes a conversion to the day of the ad click, your more recent data is likely incomplete since you’re missing conversions that are going to come later.

Tip

Once you have enough conversion data, see what proportion of your app conversions happens over different periods of time. For example, see what percentage of conversions happen in the first 7, 14 and 30 days after someone clicks on an ad. Identify when the majority of app conversions happen to understand your typical conversion delay. Then check to see if the conversion window you’ve set is long enough to account for this conversion delay.

It’s important to analyse performance by setting a time range that is at least equal to your conversion delay. Then remove the more recent click data, which is likely missing conversions.

Evaluate your target cost per conversion

First, see if App campaign is meeting your target cost per conversion over a time range that accounts for the typical conversion delay of your ads. Then, decide if you’d like more volume or return on investment (ROI). If you’d like to find more conversions, increase your target bid and budget. If you’d like to make more money from what you spend, decrease your target bid.