If you’re considering Google Ads but feel uncertain about the potential return on your investment (ROI), you’re not alone. It’s tough to commit your marketing budget without a clear idea of what might come back in profits. Fortunately, there’s a simple process you can follow to estimate whether Google Ads is truly worth it for your business. In this post, we’ll walk through that process step by step, show you how to use our free spreadsheet to calculate your expected ROI, and reveal how to adjust your numbers to get a more accurate picture of your potential returns.
Why Estimating Google Ads ROI Matters
Google Ads can be an incredible growth channel for many businesses. However, the key to success is ensuring that the revenue gained from your campaigns justifies the cost of running them (plus any management fees or time spent optimizing). By running an ROI calculation before you launch your ads, you can:
Set a realistic initial budget.
Determine whether a particular set of keywords is financially viable.
Avoid overspending on ads that won’t bring in enough revenue to cover costs.
Understanding Your Google Ads Budget
Below is a helpful video that walks through the entire process. Watch it to see exactly how to estimate your returns and set up your budget correctly.
Step-by-Step ROI Calculation
1. Gathering Your Data
Before you start crunching numbers, you’ll need:
Seed keywords for your Google Ads campaign.
Estimated cost-per-click (CPC). You can use Google Keyword Planner to get a range of top-of-page bid estimates.
Monthly budget you’re willing to allocate to your Google Ads.
Monthly management fee (if you’re hiring an agency or freelancer).
Website conversion rate (the percentage of site visitors who become leads).
Lead-to-sale rate (the percentage of leads that convert into paying customers).
Average job or order value (the amount of revenue you typically earn from one sale).
Operating profit margin (the percentage of revenue left over as profit once all operating costs are subtracted).
Having these figures on hand speeds up the calculation and helps you refine your ROI estimate.
2. Entering Your Costs
Once you open the spreadsheet (download link below), you’ll find fields in blue that you can customize:
Average CPC – Enter the approximate cost you found in Keyword Planner. For instance, if your keywords range from $3 to $5, you might choose $4 as an average.
Monthly Management Fee – How much you’ll pay someone to manage your campaigns (or 0 if you’re running them yourself).
Monthly Budget – The total amount you plan to spend on clicks each month.
3. Estimating Clicks and Conversions
The spreadsheet will calculate how many clicks you can expect given your monthly budget and average CPC. For example, if you have $500 and your average CPC is $4, you’ll get around 125 clicks.
Next, you’ll see a table showing potential conversions across different website conversion rates (e.g., 2%, 5%, 10%, etc.). This helps you see how lead volume changes if your conversion rate improves.
4. Factoring In Your Lead-to-Sale Rate
A “conversion” typically means a new lead. The spreadsheet then helps you calculate how many of those leads will become customers, based on your lead-to-sale rate (sometimes known as your close rate). So if 50% of your leads request a quote and 50% of those end up buying, that means 25% of your total leads turn into sales.
5. Determining Your Profit
Finally, the spreadsheet calculates your estimated revenue and deducts your ad spend and management fees. It also factors in your operating profit margin, so you can see how much you’re likely to profit after all operating costs.
Example:
Monthly Budget: $500
Management Fee: $300
Average CPC: $4
Average Job Value: $1,000
Operating Profit Margin: 20%
By plugging these into the spreadsheet, you’ll see how many customers you can expect, what your total revenue might be, and how much you’ll keep as profit after costs.
Don’t Forget Lifetime Customer Value
One thing the spreadsheet doesn’t factor in directly is the lifetime value of a customer. If your customers return for repeat purchases or if you can upsell them to more expensive products/services later, your initial Google Ads investment could be even more profitable in the long run. Keep this in mind when you’re deciding if the initial ROI you see is high enough to test Google Ads for your business.
Download our ROI Spreadsheet
Ready to see your potential Google Ads results?
Click here to download our free ROI spreadsheet
(No email address required – it’s a direct download link. Simply open the file and begin customizing the fields to match your business numbers.)
Predicting the ROI of your Google Ads campaign before it launches is a smart way to protect your marketing budget and avoid disappointment. By combining data from Google Keyword Planner with realistic assumptions about your conversion rates, lead-to-sale rates, and average order values, you’ll quickly see if Google Ads is a profitable move for your business.
Use this spreadsheet as a starting point, but don’t forget that results can vary once your campaigns go live. Regularly review your actual performance data, and be prepared to optimize your keywords, ad copy, and landing pages. With a structured approach, Google Ads has the potential to become a sustainable revenue driver for your business.
Happy calculating, and may your Google Ads campaigns bring in a positive ROI!