NestScale Blog

Google Ads ROI Definition, Calculation & How to Improve

google ads roi

Welcome, everyone, to our guide on Google Ads metrics! We’re here to simplify the complex world of online advertising returns. Ever wondered how businesses make their Google Ads campaigns work wonders? We’re breaking it down step by step. From understanding what ROI is to figuring out how to calculate it, and discovering the secrets to making it better – we’ve got your back.

So, let’s jump right into the table of contents and explore the key aspects of Google Ads ROI that can transform your digital marketing game.

What is Google Ads ROI?

The ROI of Google Ads, or return on investment, is a crucial measure for businesses. It signifies how much money you earn compared to what you spend on ads. Essentially, ROI shows if your advertising investment is profitable. By optimizing ads and websites, businesses aim to increase ROI. This means ensuring that the money earned from customer purchases exceeds the amount spent on advertising. It’s a balancing act where effective ad strategies and website enhancements lead to higher profits. 

When businesses achieve a positive ROI, it indicates that their Google Ads campaigns are successful in generating revenue, making the investment worthwhile.


When it comes to analyzing your ad campaigns, tools like Google Ads can overwhelm you with data. However, there’s one crucial metric you shouldn’t overlook: your ROI for total ad spend, also known as ROAS (Return on Ad Spend). These terms can be confusing, so let’s explore the differences between ROI and ROAS to gain a clearer understanding of Google Ads metrics.

google ads roi vs roas

How to calculate Google Ads ROI?

Calculating Google Ads ROI is a smart way to figure out if your advertising efforts are paying off. There are tons of Google Ads ROI calculators out there, but you don’t really need them. Calculating your Google Ads ROI is surprisingly simple, and you can do it all by yourself using just a basic formula.

google ads roi formula

Imagine you sell something for $400, and you spend $400 on your Google Ads. You sold five of these items, making your total sales $1000. Now, if the production cost of the item is $200, plug in the numbers like this:

ROI = 0.67 or 67%

To turn 0.67 into a percentage, multiply by 100. In this case, your ROI is 67%. This means for every dollar you spent on ads, you made $1.67 in return.

Remember, the exact numbers you use will depend on what you’re selling and how much your ads cost. To get these numbers, keep an eye on the conversion actions people take on your website after clicking on your ads. 

Why should we track ROI in Google Ads?

Tracking ROI in Google Ads offers a multitude of benefits that are essential for any business striving for online success. Let’s break down several reasons why we should do that!

Understanding Real Impact 

Metrics like clicks and impressions provide some insights, but they don’t tell the full story. ROI, however, offers a comprehensive view of how your ads affect your business. It goes beyond surface-level metrics, giving you a clear understanding of the actual profitability your campaigns bring. This insight helps you align your advertising efforts with your organization’s goals and objectives.

Gauging Campaign Success

By monitoring conversions – the leads or sales generated from your ads – you gain valuable insights. This information empowers you to make well-informed decisions regarding your budget allocation and where to focus your campaign efforts. For instance, if a specific ad demonstrates a high ROI, you can confidently invest more in it. On the flip side, if an ad isn’t performing well, you have the option to refine it using lessons from successful ads or cease its run entirely.

Making Data-Driven Decisions

Instead of relying on intuition or guesswork, concrete statistics guide your decisions. Regularly measuring and optimizing your Google Ads ROI ensures your advertising budget not only stays efficient but also generates a positive return on investment. This data-driven approach fuels the growth of your business. Tracking ROI isn’t merely about numbers; it’s a strategic tool that empowers you to make intelligent choices.

What is a good ROI for Google Ads?

When it comes to Google Ads ROI, the average benchmark for a good return on investment is often considered to be 100% or a 2:1 ratio. In simpler terms, if you invest one dollar in your Google Ads campaign, a 2:1 ROI means you’d ideally want to get two dollars back in revenue. This 2:1 ratio signifies that for every dollar you spend, you’re expecting to earn two dollars in return from new leads, sales, or engagement. 

So, what is a good Google Ads ROI? A 5:1 ratio, where you earn five dollars for every dollar spent, is excellent. Some top-performing campaigns even achieve a 400% ROI or more, meaning they make four dollars or more for every dollar spent. This indicates highly successful advertising efforts.

ROI shows how much profit you’re making compared to your costs. According to Google, businesses typically make $2 for every $1 spent, resulting in a 100% ROI. While actual ROI can vary based on different factors, aiming for a 2:1 ratio or higher is a solid goal for Google Ads campaigns. It ensures you’re getting a strong return on your investment, indicating a well-performing advertising campaign.

How to improve the Google Ads ROI? 

Improving your Google Ads ROI involves several key steps that can be broken down into four main parts:

how to improve the google ads roi

Keyword optimization

Begin by optimizing your keywords. This means selecting the most relevant and high-performing keywords for your ads. Use keyword research tools to identify these keywords. Regularly monitor their performance and adjust your strategy based on the data you gather. Focusing on appropriate keywords ensures that your ads are reaching the right audience, increasing the likelihood of conversions.

Ad quality and extensions

The quality of your ads matters significantly. Craft compelling ad copies with clear CTA. Enhance your ads with extensions like site links, callouts, and structured snippets, providing additional information about your business. High-quality ads not only attract more clicks but also improve user engagement, leading to better ROI.

Landing page optimization

Your landing page plays a crucial role in converting clicks into actual leads or sales. Ensure your landing page aligns seamlessly with your ads, maintaining consistency in messaging and offers. Conduct A/B testing to determine the most effective landing page design and content. A well-optimized landing page with relevant information and persuasive calls-to-action enhances the user experience, boosting the chances of conversions.

Bidding Strategies

Utilize targeted bidding strategies offered by Google Ads, such as target CPA or ROAS. These automated strategies adjust your bids based on performance data, maximizing your ROI. Regularly monitor your campaigns, analyzing ad performance, keyword effectiveness, and user engagement. Make data-driven adjustments to your ads, keywords, and bidding strategies. Continuous monitoring and refinement ensure that your campaigns remain effective and provide a positive return on your investment.

Or, make the most of the Google Ads ROI with NestAds! 

Understanding the ins and outs of your Google Ads performance is essential, especially considering variables like industry and specific ad content. Recognizing the significance of these factors and consistently refining them can significantly enhance your Google Ads ROI. By tweaking your approach, you can increase user engagement, attract more visitors, and make the most out of your ad campaigns.

how to improve the google ads roi

We understand managing ads can be overwhelming, especially for busy businesses. That’s where NestAds comes in. Our user-friendly software simplifies everything, including tracking your Google Ads ROI. It gathers all your essential data in one place, providing a clear view of your business’s growth and helping you optimize your ads performance.

NestAds stands out with its broad reach across different advertising platforms. Our NestAds Pixel tool makes it easy to monitor and analyze your campaigns on various platforms, using vital data to improve your Google Ads ROI. This means you can make informed, data-backed decisions that consistently lead to excellent results. Ready to level up your advertising game and maximize your ROI? NestAds is here to help!



Recent post

You may also like...

Want to grow your business? Let's talk.