Google Ads ROI Projection Analysis Tool | Oui Creative

How to Project Your ROI With Google Ads

I’m going to show you exactly how we project the results of Google search campaigns for our clients and why it’s a crucial step to setting your PPC campaigns up for success.

Understanding the metrics and data behind your campaigns is the only way to project your potential return on investment (ROI).

The Keyword Research Process

 

First, we start by doing extensive keyword research for your industry and local market (when applicable).

We take into account a variety of metrics such as monthly search volume, trends, competition, and average cost per click. We use tools like the Google Keyword Planner and SEMrush to collect data.

We’ll then sift through the list in a spreadsheet and organize keywords based on the relevance and search intent.

Our projection tool takes all of these keyword data and outputs the total monthly search volume for all the keywords combined. Right of the bat, this gives you a global view of how much search potential there is within your target area.

Keyword research with SEMrush

Consider These Important Ad Metrics

 

In order to project accurate results, we’ll have to assume certain variable metrics such as Click-Through Rate (CTR) and Conversion Rate.

Your CTR tells you how often people click on your ad after seeing it. We use an average of 5% CTR, which may vary across industries due to competition, ad copy, ad quality, and ad position.

We always try to be conservative with our estimates. We consistently get above average results but we like to shoot for worst case scenario to manage expectations.

Your conversion rate is perhaps the most important metric as it tells you how many people who click on your ad actually take action, such as filling out a form, calling your business or making a purchase.

These trackable, valuable actions will differ based on your business model. A service company may put more value into receiving a phone call, while an e-commerce store would consider a purchase as the most valuable conversion.

We assume an average conversion rate of 10%, which varies based on industries and business models. Your landing pages are the biggest factor in improving your conversion rate. Things like copywriting, your offer, the design, interface and call to action are all critical aspects of a good landing page.

Google Ad metrics like CTR and CR | Oui Creative

Once we enter these variable metrics (CTR and CR), the projection tool automatically calculates a number of monthly clicks as well as a projected monthly ad cost.

We multiply the total number of clicks – given by our CTR – by the average cost per click for each keyword, which is calculated by getting the average number of monthly clicks times the average CPC at the keyword level.

This gives us our expected number of monthly leads, as well as the average cost per lead.

Now keep in mind this projection is taking the entire volume of all the targeted keywords. You will be competing with other businesses, so unless you have a really high budget to compete, you will only capture a fraction of this volume.

Determining Your Budget

 

Here’s where things get interesting. By entering your monthly ad spend, our projection tool automatically estimates the number of monthly leads. This helps establish realistic expectations and where we can find the biggest opportunities for improvements.

The entered monthly ad budget calculates a percentage of the total estimated monthly cost of the entire list of keywords.

This then averages a number of estimated monthly leads based on the entered CTR and conversion rate.

Know Your Numbers!

 

In order to calculate your return on investment (ROI), we need to take things like close rate and lifetime customer value into account.

Your close rate tells you how many leads actually turn into customers. If we estimate a close rate of 50%, it means that for every 10 leads, 5 of them will become customers.

The average customer value tells you how much, on average, each customer is worth to your business. Make sure to consider repeat business opportunities, potential referrals or online reviews that directly or indirectly impact your business’s revenue.

The close rate and average customer value are metrics that you and your business have control over. You can work to improve those internally by hiring salespeople or implementing programs to squeeze out more money per customer.

The CTR and CR are metrics that we, the agency, have control over and will be looking to optimize over time.

Google Ads ROI projection | Oui Creative

The ROI Formula

 

Once we have an estimated close rate and lifetime customer value, we can easily project your campaign’s potential ROI by taking the average monthly leads divided by the close rate and multiply this number by the average lifetime customer value. We then divide the estimated revenue by the initial investment (your monthly budget), which gives us a percentage of your expected return on investment.

The higher the ROI, the more successful your ad campaign is at driving business and generating revenue. In this example, you can see that the $5,000 monthly investment is generating an estimated ROI of 190%. If we work to increase these metrics, you can see how the ROI can go up significantly. Increase your close rate by 5%, add another $100 of customer value or increase the on-page conversion rate by 5% and see how the ROI shoots up significantly to close to 400%.

Understand that this tool cannot be 100% accurate. There are too many variables to be able to predict exact results, but we have found that it is surprisingly accurate at projecting early results and establishing a preliminary budget, or finding where new opportunities lie.

Google ads data analysis for optimizing your campaigns | Oui Creative

We always recommend new clients invest 30 to 60 days into the platform to collect relevant data. Without data, you can’t measure and optimize, so you have to pay to collect enough upfront to make educated decisions down the line.

Once you start accumulating data, you can identify certain patterns, keywords, locations, devices, and optimize results accordingly. These optimization practices will help you make the most of your budget and avoid wasting money on certain variables that do not convert well, whether it is a specific demographics, ad or keyword.

In conclusion, understanding the data and metrics behind your Google search campaigns is crucial in determining their success and ROI.

Do not jump into these ad platforms blindly. Your agency should be able to work with you to help you get the results you expect.

If you are looking for a new PPC partner, we encourage you to book a discovery call with us, where we’ll walk you through the process step by step and show you exactly how to get the most out of your Google ads and your digital marketing campaigns.