ROI and ROAS are key campaign performance metrics in Google Ads. Crucial as they relate to financial issues. Want to make sure your advertising is actually profitable? Learn about ROI and ROAS.
ROAS Google Ads
ROAS(Return on Advertising Spend) is the revenue generated by the budget used for an advertising campaign. It allows you to determine how much revenue every penny you put into advertising on Google has generated. Remember, though – this is revenue, and does not take into account the margin or real cost of sales.
ROAS = revenue/cost*100%
If you are using Google Analytics 4 you will find data regarding ROAS in the “Reports” tab. You need to select the Google Ads campaign report – “Return on Advertising Expenditures” in the “Acquisition” section. You can also use custom reports, which you can find in the “Explorations” tab.
In Google Ads, on the other hand, you will find ROAS data in the “Conversion value/cost” column.
Google Ads ROI
More detailed data is provided by ROI(Return On Investment) – the absolute profitability of a campaign. This is an especially important indicator for entrepreneurs investing in advertising.
ROI = net profit/cost*100%
In order to calculate ROI, you need to know data on all the costs associated with sales – from the cost of production, to labor, warehousing and margin.
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ROAS and ROI – how to calculate them?
You’ve learned the formulas for ROAS and ROI, but of course you don’t have to count anything by hand. Proper configuration of your Google Ads campaign will get the job done, it will give you reports and real-time access to data. They are the ones that will allow you to draw conclusions and guide your ad campaign to make the most profit. You can rely on automatic strategies for setting campaign rates, such as minimum and automatic ROAS. However, nothing is a substitute for taking a rational look at the campaign data and making changes to the settings that will help optimize the campaign.
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How to improve ROI and ROAS?
The recipe for good campaign performance indicator values revolves around what is important for the success of advertising in Google Ads. It is important to skillfully prepare the campaign, supervise it, and continuously optimize it. A few of the elements to improve first, for improving ROI and ROAS are as follows
- The use of exclusionary keywords;
- Refining the landing page that customers go to;
- Optimizing rates, budgets, and regularly checking that conversion parameters are at a good level.
In conclusion – if you care about good ROAS and ROI values, it is worth betting on optimization and proper configuration of Google Ads campaigns.
