One of the most common questions we get from plumbing clients at Relentless Digital is, “What is a good ROAS for Google Ads?” ROAS (Return On Ad Spend) is a key metric for measuring the effectiveness and success of ad campaigns.
At Relentless Digital, we’re leaders in the digital marketing industry, offering services like Google Ads management for plumbers, website design, reputation management, and more. Below, we’ll take a deep dive into ROAS for Google Ads, including what’s a “good” ratio, support factors, and how to optimize, increase, and calculate ROAS.
What is ROAS (Return On Ad Spend) for Google Ads?
Return On Ad Spend, or ROAS, is a ratio that refers to the amount of revenue generated for each dollar spent on an ad campaign. Simply put, it’s a critical metric that measures the success of a digital marketing campaign. Hold up; we know what question you’re going to ask next:
But Wait, Isn’t That ROI?
No. ROAS is different from ROI, which is Return On Investment. ROAS is a short-term measurement of your average ad spend, whereas ROI is a long-term measurement of your net profits compared to total investment. You can access more key metrics using the Google Analytics dashboard.
What’s a “Good” ROAS Benchmark for Google Advertising Campaigns?
So, let’s start by answering the main question: what is a good ROAS for Google Ads? Well, defining a precise answer to that question can be challenging. But, generally speaking, most experts agree that a good ROAS ratio for a PPC Google Ads campaign is about 400%, which is a 4:1 return.
However, you’re not guaranteed to see that level of ad revenue. Using ineffective ads could result in a negative ROAS; if you launch a successful campaign, you could see a higher ROAS.
Here’s something else to consider: Google Search Network “conservatively estimates” that businesses receive $8 in ad revenue for every $1 of money spent on a PPC campaign.
What Factors Determine a Good Return on Ad Spend (ROAS)?
First, there are wide variations in ad spend from business to business and throughout different industries. Therefore, what some companies consider a “good” ROAS may be barely enough for another business to scrape by.
How much revenue you can generate from your advertising costs can vary based on your industry, the type of ads you use, specific channels, and other factors. Below, we’ve listed three elements that directly impact ROAS and conversion rates.
1. Your Specific Industry (Plumbing)
Every business caters to a unique demographic, from local to nationwide. As a plumber, your customer base is entirely local. For example, the average ROAS for a plumber will be significantly different than the average return for an eCommerce company. So, when monitoring ROAS, it’s important to compare your ratio with that of similar businesses in your industry.
2. Category Maturity
Category maturity is just a fancy term for how unique or original your service or product is in the marketplace. In other words, it helps you determine how well people understand your primary service. Then, you use that information to pinpoint the degree of marketing efforts and advertising costs it will take to educate your target audience properly.
3. Advertising Campaign Channels
Another critical factor impacting where your ROAS stands is the advertising channel you pick to launch your campaign. The pandemic proved that investing in digital ads is necessary for businesses to succeed. However, there’s a catch: that interest has resulted in platforms charging more money for ad campaigns.
For example, advertisers were subject to a 47% increase in the cost of a Facebook ad campaign from quarter three of 2020 compared to quarter three of 2021. Of course, an increase in your total ad spend will directly affect your average ROAS and profit margin from every dollar spent on your campaigns, depending on which channel or platform you choose.
Google Ads Campaigns ROAS Calculation: How-To
Knowing the ROAS calculation for Google Ads is critical knowledge for your business. While you may think calculating ROAS sounds complicated, it’s relatively simple – once you have the correct numbers for your total ad spend and revenue. After some practice calculating the ROAS formula, you can determine whether you have a high or low ROAS.
Here’s how you can calculate ROAS for Google Ads:
ROAS = Total Ad Revenue / Total Ad Spend
Alternatively, some businesses use the same ROAS formula but multiply it by 100 to format the answer as a percentage:
ROAS = Total Ad Revenue / Total Ad Spend x 100
When using the second formula, if your ROAS is at or below 100%, your business did not make a positive return on ad spend.
If math isn’t your strong suit, Google Ads and other platforms (like Facebook) have tools to calculate ROAS for you. For example, Google Ads uses Conversion Value / Cost to determine ROAS.
How Can You Increase Your ROAS for Google Ads?
Even if your average ROAS is low, it doesn’t mean your advertising strategies are ineffective. Often, all it takes to boost ROAS is some optimization and a few modifications.
So, how can you improve ROAS? Here are valuable tips your business can use to generate more revenue from your advertising efforts:
1. Target the Right Audience
As a service-based business, it makes sense that your customer base is entirely local. As such, it’s essential to focus your advertising efforts and marketing strategies so they will reach potential customers in your specific region and the local community. Your targeting should be as precise as possible to avoid ineffective ad placement.
For example, you may want to consider allocating part of your Google advertising budget to launch a local campaign via the Performance Max tool. It allows you to implement ads that will appear across multiple Google channels, including:
- Google Maps
- Google Search Network
- Google Display Network
- Google Business Profile
2. Reduce Ad Costs
Reducing ad spend and operating expenses can also help you boost ROAS and your profit margins.
First, start tracking the average ROAS for each specific campaign. Then, eliminate any underperforming ads that aren’t generating sales. Reinvest the money to maximize results from effective ads that provide tangible benefits, like increasing your conversion rate or customer acquisition.
Next, refine your audience targeting and keywords. For example, you may want to try including negative keywords in your ads. For businesses using PPC campaigns like Google Ads, implement a budget cap. Click-throughs are all well and good, but that’s only if your budget can support them.
Here are a few more quick tips to help you reduce ad spend:
- Launch ads with images instead of videos
- Outsource your ad development to marketing experts
- Use videos and music with no copyrights
- Keep video ads short and sweet
3. Optimize Landing Pages
The quality of your landing page can make or break that critical first impression a potential customer makes of your business. If the page looks cheap, unprofessional, dull, or confusing, you can kiss your conversion rate goodbye.
Remember, when customers click on your ads, it sends them directly to your landing page. As such, you must refine, optimize, and perfect every landing page to ensure it’s visually appealing for customers and maximizes your ROAS.
Here are a few tips to make your digital presence look authentic, professional, and credible:
- Create a compelling and enticing headline
- Identify primary pain points and then explain why your business is the best solution
- Keep your content high-quality, short, straightforward, and easy to read
- Use website copy that emphasizes how a customer will benefit from patronizing your business
- Ensure that you have an easily navigable layout and menu
- Include strong CTAs (calls to action) and contact information
- Use images, videos, or infographics where appropriate
- Ensure the page is responsive and mobile-friendly
4. Invest in Digital Marketing Services from a Professional Agency
We won’t sugarcoat: it takes a significant amount of time, effort, skill, and knowledge to build a positive ROAS from Google Ads (or any other digital platform). Furthermore, your hands are already full running your plumbing company.
Instead of spending more time learning how to create compelling ads or calculate and track ROAS, consider investing in digital marketing and advertising services from an experienced agency. Here at Relentless Digital, we offer tried-and-true methods to help your business thrive, including services for Google Ads management, website design, email marketing, SEO, reputation management, and more.
Boost Your Google ROAS with Relentless Digital
So, to recap the answer to our main question – What is a good ROAS for Google Ads? – it depends on your specific industry, audience, and ad type. However, experts generally consider 4:1 as a good ROAS.
If you’re still unsure how ROAS impacts your company’s ad revenue, it’s okay. The Relentless Digital team is here to help you navigate marketing and advertising with confidence and skill.
We can do it all, whether you need help building ad campaigns, setting up Google Local Service Ads, or implementing general marketing services for your plumbing company. Call Relentless Digital now at (262) 624-1726 to request a consultation.