Spending money to generate leads is one of the necessary evils of running a business. Whether you are working on marketing, branding, advertising, etc. you are spending money to generate new leads for your business. When it comes to Google Ads, you can create strategies and spend in the right places that will help you generate new leads, and grow your business.
Whenever you are spending money on advertising, you will want to measure your results to make sure it’s working for you. Not every advertising campaign is successful, and some can go unusually well, but we want to show you a few benchmarks that will help you evaluate your Google Advertising success.
The first way to measure your success is tracking conversions.
What is a conversion?
A conversion is when an intended action is taken by your visitor. For example, if someone clicks on your ad AND fills out a form on the landing page, that is a conversion! If someone just clicks on your ad, but doesn’t fill out the form, then this is NOT a conversion.
Conversions can look different depending on what you want the visitor to do. You may want them to call a phone number, purchase a service, fill out a form, download an app, etc. No matter what action they need to take to be considered a conversion, you must make sure you are tracking these conversions.
This is a great way to determine if your advertising is successful, and your ads are performing effectively.
Conversion rates vary, mostly between 1.5% – 5%. Some industries see higher conversion rates, up to 11% with some of the most successful campaigns. According to a 2018 study by wordstream, the average conversion rate for Google Ads is 3.17% on Search and 0.46% on Display Network.
These numbers can fluctuate, and you can dig a little deeper depending on what industry you are in, but as long as your conversion rate is around 3%, you are operating pretty much average for Google Ads.
Return On Investment
This is one of the most important terms when it comes to spending money on generating new leads. What is the actual return you are getting from your investment? If you spend $100 advertising, and you then sell $200 worth of goods, your ROI is $100.
Now if you are only making a small profit on those sales, this may not be a great ROI. Conversely, if you have high-profit margins, this may be considered a successful campaign! This can vary very much depending on your business, and determining the ROI you desire is a good way to measure how successful you are with Google Ads.
According to research by the American Economic Association in 2018, businesses make an average of $2 in revenue for every $1 they spend on AdWords. If you are doubling your ad spend in revenue, it’s generally a good sign. And it would stand to reason that you could spend more, and get the same results.
Obviously the better the conversion rate, the better your ROI will be as well. This is why increasing your conversion rate is an essential part of making a successful Google Ad campaign.
Use Search Term Reports
One of the most useful tools Google offers is search term reports. These will let you know what keywords and terms people were searching for when they came across your ad. You can compare these to your current keywords that you use, and refine your keywords to match more of what people are searching for. This can help you increase conversion rates and ROI.
It can also help you to eliminate terms you don’t want your ads found for. One of the worst things that can happen to your Google Ad strategy is for people to click on your ad thinking it was for something else. This will result in your budget being spent, while your conversions and ROI plummet.
Improving Your Quality Score
Google gives you a quality score based on how relevant your ad is to the people who are finding it on search. If your ad is what they should be looking for, then you will have a higher Quality Score. To improve your Quality Score, make sure the keywords you are using are in line with what people are searching for, and the ads are relevant. The better you match, the better your ads will do!
Ideally, you want your Quality Score to be between 8-10.