Google Ads can be one of the most effective ways to attract customers to your business. So, can you cover the Google Ads costs?
In this guide, we’ll go over the process of starting a Google Ads PPC campaign so you can elevate your digital marketing initiatives in a surprisingly affordable way. Below you can find the related topics in order.
Define Your Google Ads Goal
If you have an e-commerce website, your first goal is to make sales and increase your revenue. If you are in the service industry, your first goal is to obtain leads directly from your website or application. Whatever your goal is, two things need to be clear: your crucial conversion metric and the value of each conversion.
For e-commerce, your metric is the value of the order at checkout. However, the service industry must assign a value to each interaction type. For example, a detailed report may be worth $20 to download (get lead) and $100 to complete a form.
Here we will focus on the example of a customer’s garden furniture e-commerce in the UK, but what we will focus on here can also be applied to other service industries.
Identify Your Three Critical Business Metrics
You must grasp the three most important metrics in any Google Ads campaign to track your success. (1) Average Order Value, (2) Profit Margin, and (3) Conversion Rate.
The metrics in our garden furniture shop example are: To begin with, we first need to determine an approximate budget. Let’s take our primary keyword, “garden furniture,” and you can find it with any keyword planner; we will use semrush in this example.
This will show us the average monthly search volume (search volume), average cost per click (CPC) and competition levels.
At this stage, as with such high levels of competition, we will estimate a click-through rate of around 5%; it would be wise to expect a single-digit click-through rate as other advertisers will equally entice searchers with offers.
We can then add these numbers to our table and calculate the cost by multiplying the number of clicks by the cost per click (15,000 clicks * £0.48):
Next, we add our revenue with the formula Click X Conversion Rate X Average Order Value.Let’s take another example: a health supplement business with a much lower average order value, higher cost-per-click, but also higher margins and conversion rates:
Here, the profit margin is lower after advertisements. Still, reinforcement businesses generally have a high repeat customer ratio, so making a low profit on the first sale (or no profit at all) is an acceptable cost.You Must Install the Conversion Code Correctly
It might seem obvious, but it happens more often than you think that you can’t set the conversion code setup correctly.
The most common errors:
- Simply import revenue from Google Analytics instead of creating a specific Google Ads conversion tag. (Most e-commerce platforms have clear documentation for setting up Google Ads conversion tracking.);
- Not checking if the currency of the revenue figure matches the currency of the pay-per-click spend. This often happens when a business has websites in different countries. Still, it can be avoided by double-checking that revenue figures from Google Analytics or Google Ads match those on the associated e-commerce platform.
- Not importing phone call conversions: This usually requires working with a 3rd party. (Search Google for “eCommerce phone call tracking solutions” for options.)
- Making multiple payments but only tracking conversions in one. (The most common problem when providing additional payment options, such as Amazon Pay or Finance. To find the error, compare the transaction IDs in Google Analytics > E-Commerce > Sales Performance Report with your transaction IDs in your e-commerce platform. If the IDs are unavailable in Google Analytics, they are used to check the payment way.)
- Using revenue from Add to Cart conversions instead of completed sales conversions. (In Google Ads, check the conversion settings page to ensure payment is only imported from the purchase conversion tag.)
- If you need to know the actual value of your conversions, you should know that you will have difficulty running a profitable Google Ads campaign. Therefore, the first thing we need to do is to determine the value of conversions well. This is not only required for Google Ads performance measurement; it is required for all paid channels.