It’s never been easier to setup a Google Ads campaign. Google has made it easy as for almost anyone to get a campaign up and running in minutes.
But this simplicity comes with the problem of users not actually knowing what they’re doing.
Yes, they may know how many conversions there are, as well as their cost per conversion. But that isn’t enough to maximize the profitability of PPC campaigns.
And this doesn’t just apply to Ecommerce either. Lead generation websites should also be tracking the revenue generated from closed sales.
In this post, i’m going to outline why it’s important to be tracking revenue associated to your Google Ads campaigns. Also why it’s not only good for your campaigns, it’s for the good of your business too.
Why It’s Important
One of the biggest issues we find with our new clients here at Conversion Hut, is not knowing how well campaigns are doing in terms of the revenue that their campaigns are making.
To put it simply, if you aren’t tracking your revenue back to your campaigns you are running in the pitch black without a torch.
What you are doing is essentially treating every conversion the same.
And unless each conversion in your store is the same price and can only been bought one at a time, this is going to be of absolutely no use to you or your business growth.
By tracking revenue, you’re able to make data-backed decisions based on what’s making you the most money.
Picture this. Bob’s Bikes is a fictitious ecommerce store and is running some Google Ads campaigns to drive potential customers to their store.
They are testing 3 different ads to see which performs the best.
Table 1
From these results we can see that Ad 3 is clearly the most profitable right?
Wrong.
All we can see here is that Ad 3 is bringing in the most conversions at the lowest price.
“But surely if it’s getting the most sales, then it’s making the most money?”
It’s impossible to tell from just looking at these figures. What we need to know is how much revenue each of the ads has made for the campaign.
Let’s do some data analysis again, but this time let’s include the revenue for each of the ads.
Table 2
In order for Bob’s Bikes to be profitable, they need to be getting a minimum of a 250% Return On Ad Spend (more on this shortly).
So for every $1 put in, they get $2.50 back.
So Ad 3 isn’t actually as profitable for our business as we thought it was.
Infact, Bob’s Bikes is actually losing money by continuing to run this ad.
Uh-oh.
Next up we have Ad 2. In example one, it was in the middle of the pack and looking like it was performing ok.
Wrong again my friend.
In-fact this ad is only bringing in conversions at break-even for the seller. Not good news.
But in fact we can see that the ad with the highest cost per conversion and the lowest conversion rate is actually performing the best out of all the ads.
It’s returning $4 for every $1 spent. That’s a 800% ROAS.
Now that’s easy math to understand.
So if they ran with what looked best in Table 1, all that would do is decrease their revenue but increase their conversions.
You’d essentially be doing more work and making less money.
Types Of Revenue Tracking
Before we get into what to do about it, i’m going to touch on the different types of revenue tracking that we use in-house.
The one we use for our clients is called ROAS, which stands for Return On Ad Spend.
ROAS is defined as :
Return On Advertising Spend, (ROAS), is a marketing metric that measures the efficiency of a digital advertising campaign. ROAS helps online businesses evaluate which methods are working and how they can improve future advertising efforts.
In other words, we can see the amount of revenue that’s been made from a campaign paired up with how much a campaign has spent.
It is calculated as ROAS = Campaign Revenue / Campaign Cost.
So if a campaign has spent $100 and generated $400 in revenue, that would be 400% ROAS.
Also, if your profit margins were then 50%, you would be left with $100 profit.
But this is assuming that you have fixed profit margins across all of your products. Which most businesses don’t.
If you know what your profit margin is across each of your products, then instead you can do something a bit more advanced. Instead of passing your revenue for each order, you can pass your profit per sale into Google Ads.
This will make your optimizations more profit focused, rather than just relying on revenue numbers.
Here’s what Frederick Vallaeys, CEO of Optmyzr had to say about it :
“I like to look at profitability rather than just ‘conversion value’ or ‘conversion value / cost.’ Anyone with a catalog of more than a few products probably has different margins for different products and we like to bring this margin data into our bidding logic so that we’re not just driving a lot of conversions, but especially profitable ones.”
How To Track Revenue In Google Ads
Now we’ve got the complicated bit out of the way, it’s time to get these numbers into Google Ads.
First of all, you should already without a question of a doubt have your conversions setup within Google Ads and your tracking code installed.
If you don’t, stop what you’re doing right now and go and do it once you’ve finished reading this post!
Follow this guide here.
In order to track the values, we need to get the transaction amount from your ecommerce platform into the Google Ads tracking code.
First of all you need to make sure that you can allow values to be set from within your conversion action settings :
Next up, we need to get some numbers related to the transaction into the tracking code :
<!– Event snippet for sales on conversion page –>
<script>
gtag(‘event’, ‘conversion’, {
‘send_to’: ‘<!—- YOUR TRACKING ID ——>’,
‘value’: <! —- Order Value Goes In Here —->,
‘currency’: ‘GBP’
});
</script>
Remember that if you want to optimize for profit, you’ll need to put those details into value field instead.
What Difference Will This Make?
Once we have these numbers to work with, we can start to optimize based on what’s making us the most money.
Are keywords driving tons of cheap conversions but a small amount of revenue?
Great, we can optimize them now to try and fix that.
If you’re using a shopping platform like Shopify, you’ll be able to do this out of the box.
Otherwise you’ll need to do some code adjustments and may require needing to get your web developer to take a look at it for you.
That was simple enough wasn’t it?
Now every time one of your customers completes a purchase, your choice of financial figure will be sent back to Google Ads and be associated to your campaigns.
Here’s just some of the data points you can associate with value within Google Ads :
- Keywords
- Ad Copy
- Devices
- Time of Day
- Day Of Week
- Audiences
- Gender
- Age
That’s a whole lot of different pieces of data that we can use to make our Ecommerce stores more money.
Remember what I mentioned earlier about it having a big impact on your business too?
Well imagine finding out that a particular piece of Ad Copy generated more money for your business. Using those insights, you can take that message and apply it to your other campaigns to see if it has the same results.
This doesn’t just apply to ad copy either, these insights can be taken from all of the data points above and more!
I really hope you’ve found this article interesting and it’s helped you on the path to maximizing the profitability of your PPC campaigns.
Happy Optimizing!