Google Ads can help you grow your business online. Google Ads can reach the majority of Internet users.

Digital marketing is personal. You need to understand how Google Ads contributes towards your business’s goals. This is how you calculate your return on investment. What is your ROI for Google Ads?

This article will explain what ROI is and how to calculate it for Google Ads campaigns.

What’s the ROI of Google Ads?

Your ROI is the ratio of your net profit to your costs. Your ROI is the ratio between your net profit and your costs. This helps you evaluate the impact of Google Ads on your business.

How do you calculate your Google Ads ROI?

To calculate your Google Ads ROI, subtract the cost of the campaign from the revenue earned. Here’s how it looks:

ROI = (Revenue-Costs) / Costs

Let’s take, for example, a $200 product that can be made and sold at $400. The total sales reached $2400, and the production cost was $1200. This information would be used to calculate the ROI formula.

ROI = ($2400-$1200+$400/$1200+$400

ROI = ($2400- $1600)/ $1600

ROI = $800 / 1600

ROI = 0.5 or 50%

Multiplying 0.5 percent by 100 will make it a percentage. This will allow you to see what visitors do after they click on your ads.

Conversions can occur by signing up for an email newsletter, purchasing, or starting a trial. The costs will vary depending on the goals of your campaign, and the business.

Advertising and manufacturing costs are your main expenses when creating leads. Your revenue is the average sales price for every 10 leads. Each sale should be worth $50. This means that each lead will average $5 in revenue.

Why is tracking Google Ads ROI so important?

All companies that use Google Ads must have tracking ROI. While some metrics like impressions and clicks are useful, the ROI allows you to measure the true impact of your campaigns on your company.

Your ROI measures how profitable your Google Ads campaigns have been. Your ROI is a measure of how profitable your Google Ads campaigns are.

If an ad isn’t generating a high return on investment, you can either discontinue it or learn from the success of other ads.

What’s the average return on Google Ads?

It’s difficult to calculate Google Ads’ average ROI. This is because companies have to share the revenue and spending they make through Google Ads. 

Google provides an estimate of how much businesses can earn from their advertising network. It is an ROI of 100%. This is a return on investment of 100 %.

Google used cost-per-click (CPC) and activity taken from large numbers of its advertisers to compute this figure.

Google Ads ROI vs. ROAS

Another way to evaluate the effectiveness of Google Ads campaigns is the return on ad spend. This refers to your net profit compared to your costs. ROAS simply means the amount you make relative to your expenses.

To calculate ROAS, divide the total revenue from an ad campaign by its total cost. Here is the formula:

ROAS = Revenue/Cost

Your ROAS is $2 per dollar if you spend $100 and make $200.

What’s the difference between ROAS and ROI?

• ROAS refers to revenue, while ROI is concerned with net profits.
• ROAS refers to the total advertising spend. However, ROI also includes overhead costs.

ROAS can only be used to measure the effectiveness of advertising campaigns. ROI is more general and provides a better view of how profitable each campaign was for your business.

How much does Google Ads cost?

Google Ads prices can vary greatly between companies and industries. How much you spend on Google Ads will depend on the size of your campaigns and your CPC.

On average, companies spend $9,000- $10,000 per month on advertising. An organization may spend $350 to $5,000, 12% to 30% on professional Google Ad management services, and $15 to $800 on PPC management software. 

Google Ads lets you pay per click for an ad, rather than paying upfront for space. Your ad’s quality is also important.

You’ll never pay more than your maximum bid and you will always win over other ads. Your CPC may vary depending on the industry.

The Google Search Network’s average CPC is $1 to $2 per click while the Google Display Network’s average CPC is $1-$1 per Click

Include all possible items in your ROI calculations: management services costs, management software, and ad spending. 

Kobe Digital can help you increase your Google Ads ROI

It is important to have the right help to make sure your Google Ads campaigns are generating positive ROI. We can do the same thing for you.

We’re a Google Premier Partners certified agency that can manage all aspects of your advertising campaigns.