This is a quick post to cover ROAS in Google AdWords. When it comes to selling things on AdWords, there’s two things you really want to optimize for, sales volume, and return on ad spend. You want to get as many sales as possible (volume), but you want to do so whilst spending as little as possible (where ROAS comes in).
Another popular metric to track is cost per conversion (aka cost per acquisition (CPA)). The problem with this metric, is that it doesn’t differentiate between big orders and small orders.
If one month, I get a lower overall CPA than last month, but each order is for a small amount, I haven’t really won. ROAS takes into account every cent of each sale.
So how do we go about tracking this?
Firstly, its imperative to ensure your conversion tracking is setup correctly, and recording the conversion value of each sale. You want to make sure you’re dynamically adjusting the conversion value section based upon the eCommerce software you’re using. And you want also want to ensure you’re not recording any duplicate conversions.
If you’re on Shopify, check out my guide for how to do this.
After that, its simply a case of adding the correct column to your AdWords dashboard. The column is named “Conv. value / cost”.
The output that you’ll see from this column will be something like “5.21”. And the way to understand it, is that it refers to the number of dollars (or the currency unit you’re using) returned for each dollar of AdWords spend. In this example, it would be $5.21 dollars returned, for each dollar spent. Higher = better. Lower = worse.