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how to calculate return on investment in google ads?
Hey folks! So, we run this small online sex shop with a specific niche for an audience. since we are on a limited budget, we have been focusing on one product category at a time and gradually expanding.
Our marketing game mostly involves organizing events that our audience like and diving into Google Ads. Recently, we started a Google Ads campaign for a specific product category. We’re in a good spot because there’s only one other player in our country selling this product category, and we’ve got some advantages over them.
The campaign’s got a decent 40% CTR, and the Cost Per Click CPC isn’t breaking the bank. But, there’s a catch—our profit margins aren’t that big, and we have so far only lost money on google ads.
Now, the big question in the office: should we ditch Google Ads? My partner says yes, but I’m thinking long term. Yeah, we might be losing some cash now, but there could be future benefits. More orders from our supplier mean better prices. Plus, the exposure boosts our street cred, especially with little competition. Word-of-mouth could kick in, and who knows, maybe we become the go-to spot, it’s also the main product category that our niche likes so it means that once they are in they will get to see our other products as well.
and it’s only been one month, and ROI calculations might not be the whole story. What’s your take? Stick it out and play the long game, or is it time to part ways with Google Ads? Let me know your thoughts!
thanks!
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1 Reply
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This is where proper tracking and attribution comes into play. If you have an online store, you should be able to directly attribute your sales to your Google Ads. If its all offline, safest way is to simply compare your baseline spend in months you didn’t have Ads running then subtract that from the month with Ads.
All the benefits you mention are entirely possible, but if you’re not correctly measuring your campaign’s performance, you will never truly know what you’re actually paying for and may just be throwing money into the ether.
Once you have proper tracking in place, you can actually focus on making sure your campaign is always revenue positive by using a bid strategy that always maintains around a target ROAS, which protects your profit margin.
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Like the gym, your first month on Google ads is likely to be your worst. As long as you look to optimize your campaign and improve your performance numbers. If you are losing money right now, then you should look to at least breakeven in the coming month or two. Then you can look to turn a profit. All this depends on how much you are spending and how much money you are losing right now.
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Generally speaking, If there’s a product category with only 1 major competitor who’s also advertising on Google, then it should be viable channel.
But you definitely should not be losing money.
I would contact a professional, and at the very least, let them handle the campaign set up.
This excludes myself because I don’t work in e-commerce nor do I know anyone taking clients.
Too many business owners overestimate their ability to run ads for their business.
And nothing I’ve read so far both in your post or comment point to a proper set up.
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