Return on Investment (ROI) in Google advertising
Return on Investment (ROI) in Google advertising is a measure of how much profit you’ve made from your ads compared to how much you’ve spent on them1. It’s typically the most important measurement for advertisers because it shows the real effect that Google Ads has on your business2.
To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs1:
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Revenue
−
Cost of goods sold
Cost of goods sold
ROI=Cost of goods soldRevenue−Cost of goods sold
For example, let’s say you have a product that costs $100 to produce, and sells for $200. You sell 6 of these products as a result of advertising them on Google Ads. Your total sales are $1200, and your Google Ads costs are $200. Your ROI is:
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$
1200
−
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$
600
+
$
200
)
$
600
+
$
200
50
%
ROI=$600+$200$1200−($600+$200)=50%
In this example, you’re earning a 50% return on investment. For every $1 you spend, you get $1.50 back3. To help measure your Google Ads ROI, you’ll need to track conversions, actions that you want your customers to take on your website after clicking your ad such as a purchase, sign-up, or download1.
Return on Investment (ROI) in Google advertising is a measure of how much profit you’ve made from your ads compared to how much you’ve spent on them. It’s typically the most important measurement for advertisers because it shows the real effect that Google Ads has on your business.
To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs:
ROI = \frac{{\text{{Revenue}} – \text{{Cost of goods sold}}}}{{\text{{Cost of goods sold}}}}ROI=Cost of goods soldRevenue−Cost of goods sold
For example, let’s say you have a product that costs $100 to produce, and sells for $200. You sell 6 of these products as a result of advertising them on Google Ads. Your total sales are $1200, and your Google Ads costs are $200. Your ROI is:
ROI = \frac{{\$1200 – (\$600+\$200)}}{{\$600+\$200}} = 50\%ROI=$600+$200$1200−($600+$200)=50%
In this example, you’re earning a 50% return on investment. For every $1 you spend, you get $1.50 back. To help measure your Google Ads ROI, you’ll need to track conversions, actions that you want your customers to take on your website after clicking your ad such as a purchase, sign-up, or download.
Return on Investment (ROI) in Google advertising is a measure of how much profit you’ve made from your ads compared to how much you’ve spent on them. It’s typically the most important measurement for advertisers because it shows the real effect that Google Ads has on your business.
To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs:
ROI = \frac{{\text{{Revenue}} – \text{{Cost of goods sold}}}}{{\text{{Cost of goods sold}}}}ROI=Cost of goods soldRevenue−Cost of goods sold
For example, let’s say you have a product that costs $100 to produce, and sells for $200. You sell 6 of these products as a result of advertising them on Google Ads. Your total sales are $1200, and your Google Ads costs are $200. Your ROI is:
ROI = \frac{{\$1200 – (\$600+\$200)}}{{\$600+\$200}} = 50\%ROI=$600+$200$1200−($600+$200)=50%
In this example, you’re earning a 50% return on investment. For every $1 you spend, you get $1.50 back. To help measure your Google Ads ROI, you’ll need to track conversions, actions that you want your customers to take on your website after clicking your ad such as a purchase, sign-up, or download.