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.
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.
Measuring performance of Google Ads
Setting a goal for each of your Google Ads campaigns is the key to being able to measure your successes. Do you want to increase traffic to your app? Or do you want to increase clicks or conversions in your export market? Whatever your goal, the best data can help you track your ROI, and make informed changes to improve your marketing and ad spend.
1. Increasing traffic to your app and website
This is a common goal among businesses entering a new export market. You should focus on increasing clicks and click-through rate, monitoring your keywords and reviewing your search terms.
Increase clicks and click-through rate to your site by:
- Creating great text for yours ads.
- Organising your ad groups by a common theme, product, or goal.
- Creating smaller lists of tightly themed keywords to ensure your ads are relevant and compelling to your customers.
Additional tips for creating successful text ads
Create high-quality user traffic by maintaining a good keyword list. Monitor the performance of your keywords, and remove and replace those that aren’t working for you. A click-through rate of 1% or higher means that the keywords are performing well for you.
You can see a list of the customer searches that have triggered your ad in your account, and then add them as new keywords. Likewise you can add search terms that are irrelevant to your business as negative keywords. A Google Ads search terms report can help you distinguish between general traffic to your ads, and the relevant traffic that is made of people you’d like to turn into customers.
Negative keywords stop your ad or campaign from being seen by people who are searching for something you don’t offer. For example, a Garden Nursery Centre would put in ‘childcare’ as a negative keyword as they want green-fingered shoppers seeing their ad, not parents looking for a nursery. By adding negative keywords, you make your ad relevant to the very people you want to find your business.
A search term is the exact word or set of words that a customer enters when searching on a search network site. A keyword is the word or set of words that users of Google Ads create for a given ad group to target ads to customers.
2. Increasing sales and conversions
A conversion is when someone clicks your ad and takes an action on your site or app. This could be a purchase or a sign up. Increasing conversions could be your goal if you want to use a Google Ads campaign to increase engagement with your app or want to encourage people to sign up for a service.
The most important step that you can take to increase your app’s engagement and other conversions is to start paying close attention to your conversion data and updating your campaigns based on what you find out.
After tracking your conversions, you might notice that a certain keyword leads to many conversions, while another one doesn't. You could choose to spend more of your marketing budget on the keyword that produces more conversions.
You should also make sure that the destination URL you use for each ad directs your customers to the most relevant page within your website, or directly to the app center. This web page should match the specific product or service that's highlighted in your ad.
3. Raising brand awareness
Raising brand awareness should be your goal if you have created an Google Ads campaign to:
- Generate buzz around your app.
- Encourage users to interact with your brand.
- Offer users a sneak-peek at a new video.
You should focus on increasing impressions, customer engagement, reach, and frequency.
Because impressions represent how many users saw your ad, if you want to show your Google Ads campaigns to as many users as possible within your target audience, increasing impressions on your site should be high on your list.
Are your users clicking on your ads or viewing a video? This is, of course, a good thing because they’re interacting with you. Measure their interactions by using the click-through rate for Search network campaigns, and use conversions for Display network campaigns to measure your site visitors’ engagement. Use reach and frequency numbers to learn how many people are exposed to your ad, and how often they see it.
4. Increasing your return on investment (ROI)
You can use an ROI calculation to compare two advertising campaigns against each other to see how much money you've made from each one. For this you should focus on conversions. To improve your ROI, you first need to start measuring conversions. Once you've done this, you can evaluate your ROI to make sure that the money that you spend on advertising are turning into profits for your business.
Conversions are the customer actions you believe are valuable, such as purchases, sign-ups, web page visits or leads. Use the free conversion tracking tool to help track how many clicks lead to conversions.
Knowing which Google Ads campaigns are working hardest for you is made easier with Google Analytics’ data tracking and ROI measurement tools. They give you the freedom and flexibility to adapt your marketing to meet the needs of a new market whenever you need to.
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).
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.
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.
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.
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.