Google Ads are a great way to make money for your business. They can bring in leads, customers and interest in your business like no other form of advertising. However, they can also be a great way to spend money. Google Advertising can rack up bills quickly. If you aren’t making money in return, it becomes difficult to tell whether it is all worth it. Tracking and reporting are essential to being able to make good decisions and sound judgements on whether your ad spend is being used effectively, or whether it is being wasted.
So, how should you set up your reports on your Google Ads campaigns, and how can you tell if you are tracking and reporting correctly?
What metrics can I judge success by?
Judging whether a Google Ads campaign is successful or not depends on what you wanted to get out of it. Not all Google Ads are aimed directly at sales, so to judge them all by the number of leads that they produce would be meaningless.
It is worth spelling out which metrics you are able to gather for your Google Ads performance reports, along with a short explanation of what it is they represent.
CPC – Cost per Click
Google Ads often work on a basis of charging you for each time someone clicks on one of your ads. If your aim is to drive people to your website, this is an important metric to measure.
CPM – Cost per Thousand Impressions
Google Ads can help with brand awareness. CPM shows you how often your ad has been shown to 1,000 people. If your aim is to get your brand out there, and have your ad seen by people, this can be one of the most effective metrics to measure.
CPA – Cost Per Acquisition
This metric refers to the average amount that you’ve been charged for a conversion from your ad. If your aim is for your ad to lead to specific actions (sign ups, sales, app downloads etc), then you might consider targeting CPA.
CTR – Click Through Rate
Click Through Rate determines how impactful your ads are. If people see your ads, but don’t bother to click on them, it may well be because they are not well designed or eye catching enough. Click Through Rate indicate the number of clicks on an ad, divided by the number of impressions.
KPI – Key Performance Indicator
A Key Performance Indicator is not a metric that Google produces. Rather, it’s a metric that a company decides is the most relevant to its success. This can be any type of metric, and depends entirely on what the aims of your ads campaign are.
Which metrics really matter?
The most important metrics to consider vary from campaign to campaign. However, some metrics are more generally useful to keep an eye on than others.
One of the most universally useful metrics is Cost per Acquisition. This is a clear marker of the amount of money you have spent in order to acquire a customer. Cost per Acquisition shows how profitable your ads are – if it costs £10 a lead, but customers only spend £8 for your products, then you are spending too much.
Lifetime Value is another metric that is key to understanding your success or otherwise on Google Ads. This is the total amount that a customer spends with your business after they have interacted with one of your ads.
ROAS – Return on Ad Spend
For many businesses, all that really counts is how much you get back from your ad campaigns. This is measured with ‘ROAS’, or Return on Ad Spend. ROAS is expressed as a ratio – it shows how much you are spending in exchange for how much money you are making. This might be 10:1 – £10 made back for every £1 you have spent. To calculate ROAS, you divide your revenue by the amount of money you have spent on the ad or marketing campaign.
ROI – Return on Investment
Return on investment is a slightly different understanding of how you are spending and making money. It is calculated as a percentage rather than a ratio. It calculates the profits generated by ads in relation to their cost. This metric is calculated via dividing net profit by net spend, and calculating the result as a percentage (x100).
Which metrics aren’t as important?
Am I tracking correctly?
Even if you have decided on the perfect metrics to make the most of your ad spend, they are useless if you are not tracking correctly. If your data is incorrect, you cannot make decisions on how to spend your money that you can trust.
One of the most common errors in conversion tracking is to track the wrong thing. While purchases might seem the most obvious thing to track, they are not always the point of a Google Ads campaign. Instead, you need to look at the customer journey, and determine where you actually need visitors to get to. It might be likely that just visiting your site is enough to count as a conversion – especially if the visitor then returns later on to make a purchase.
You might also have trouble with the data you are receiving. If you have anecdotally received lots of interest, but your tracking data doesn’t seem to show this, you need to check what you are including as a conversion in your Google Ads campaign data. It is possible that your conversions are not setup to be specific enough, or they are set far too specifically, and cannot accurately judge the amount of conversions that you need.
Reporting on Google Ads campaigns can be complicated. If you aren’t experienced in choosing the right metrics and KPIs to follow, it can seem an overwhelming barrage of data. That’s where Gumpo can help. We are experts in setting up, monitoring, managing and reporting on Google Ads campaigns. Learn more about using Gumpo for Google Ads here.