How to measure Google Ads ROI: a guide for small businesses

To measure Google Ads ROI, take the profit generated by your campaigns, subtract what you spent on them (ads and management) and divide the result by that cost. To do this you need two things: properly configured conversions, which tell you how many enquiries, bookings or sales came from the ads, and a link between those conversions and the money that actually came in.

For most SMEs, the problem isn’t the formula, it’s the measurement. Campaigns with no conversions set up, or that count clicks as results, produce attractive reports and bad decisions. This guide explains the metrics that matter, how to set them up and how to read the numbers.

ROI, ROAS and cost per acquisition: which to use

ROI (return on investment)

This is the metric that answers the question “did I make money?”.

ROI = (profit generated by the campaigns − total cost) ÷ total cost

Total cost includes the budget paid to Google and the campaign management, whether in-house or by an agency. Profit is revenue minus the direct costs of what you sold, not gross turnover.

ROAS (return on ad spend)

ROAS = revenue generated by the ads ÷ cost of the ads

This is the metric Google Ads shows when conversions have a value. It’s useful for comparing campaigns, but it doesn’t tell you whether you made a profit, because it ignores margins.

CPA (cost per acquisition)

CPA = cost of the ads ÷ number of conversions

Very useful for businesses where the sale doesn’t happen on the website: how much each quote request, each call, each booking cost.

A hypothetical example

Imagine a renovation company in Leiria that spends €600 a month on ads and €300 on management. The campaigns generate 30 quote requests; 6 turn into jobs, with a total margin of €4,200.

• CPA per request: €600 ÷ 30 = €20.
• Cost per customer: €900 ÷ 6 = €150.
• ROI: (€4,200 − €900) ÷ €900 ≈ 3.7, or roughly €3.70 of profit for every euro invested.

Without knowing that only 6 of the 30 requests became jobs, the company would only see the cost per request, and would have no way of knowing whether the campaign pays off.

First, define what a conversion is

A conversion is an action that has value for the business. For an SME, the most common are:

• Form submitted: contact, quote, appointment.
• Phone call: from the ad or from the number on the website.
• Booking or purchase completed on the website.
• Click on the WhatsApp or email button, as a secondary conversion.
• Request for directions, for businesses with physical premises.

Clicks, visits and time on site are not conversions. They are indicators of interest. If your account optimises for them, Google will bring you clicks, not customers.

Also distinguish primary conversions (the ones campaigns should maximise) from secondary ones (the ones you track but don’t optimise for).

How to set up measurement

1. Conversion tags on your website

Use Google Tag Manager or the Google tag to record each conversion: the thank-you page after a form, the booking or purchase confirmation, the click on the phone number. Check, with real tests, that each conversion is counted only once.

2. Conversion values

Wherever possible, give each conversion a value. In an online shop, it’s the order value. In a service business, you can use an estimated average value per enquiry, worked out from your history: if 1 in 5 enquiries becomes a customer and each customer brings in, on average, €500 of margin, each enquiry is worth about €100.

3. Consent

In Portugal, measurement tags can only work fully once the visitor has accepted cookies. Google Consent Mode should be set up so that the account keeps receiving information, in aggregate form, without disregarding the visitor’s choice. We explain the rules in our guide to cookies and GDPR on your website.

4. Link enquiries to real sales

This is where most SMEs stop, and it’s where the value lies. In a service business, the sale happens days or weeks after the enquiry, away from the website. To close the loop:

• Record the source of every enquiry (ad, organic search, social media, referral).
• At the end of each month, mark which of those enquiries became customers and what they were worth.
• If you use a CRM, import those sales into Google Ads as offline conversions, so the campaigns learn to bring in customers, not just enquiries.

A well-kept spreadsheet is already far better than nothing.

Mistakes that hide the real return

• Counting duplicate conversions, for example when the thank-you page is reloaded.
• Mixing primary and secondary conversions, which leads Google to optimise for button clicks instead of enquiries.
• Judging campaigns after a few days. Campaigns need time and volume to settle. Assess them monthly, and compare with equivalent periods.
• Ignoring seasonality. In Fátima and many destinations in central Portugal, demand changes a great deal over the year.
• Leaving management costs out of the ROI calculation.
• Giving all the credit to the last click. Many people see an ad, search for the company name days later and only then get in touch. The brand campaign and organic search also get credit for customers the ads brought in.

What to ask for in a monthly report

Whether it’s done in-house or by an agency, a useful Google Ads report answers these questions:

1. How much was spent, per campaign?
2. How many primary conversions were there, and of what kind?
3. What was the cost per conversion, and how does it compare with the previous month and the same month last year?
4. How many conversions became customers, and what were they worth?
5. What was changed in the account, and why?
6. What will be tested next month?

If the report only shows impressions, clicks and click-through rate, ask for more. In our guide on how to choose a digital marketing agency we discuss other signs to watch out for.

Your website counts too

Often, the problem with a campaign that has a poor return isn’t the ads but the destination. A slow page, with no visible phone number or a long form, wastes every paid click. Before increasing the budget, make sure the landing page delivers exactly what the ad promises and works well on mobile. That’s why we run Google Ads campaigns together with the website and the measurement.

And don’t forget the people who have already converted: a customer won through ads can buy again at no extra advertising cost, through a good email marketing programme. That future value is part of the return too.

Frequently asked questions

What is a good ROAS on Google Ads?

It depends on your margins. A ROAS that’s profitable for a high-margin business can mean a loss for one with low margins. Work out your break-even point: if your margin is 25%, you need a ROAS of at least 4 just to cover the cost of the ads.

How long should I wait before judging a campaign?

Usually a few weeks for the first adjustments and around three months for a solid assessment, as long as there’s enough conversion volume. Judging after a few days leads to hasty decisions, because results vary a lot from week to week, especially in seasonal businesses.

How do I measure calls that come from ads?

You can measure calls made directly from the ad and clicks on the phone number on your website, each with its own conversion tag. To know which calls turned into customers, always ask how the customer found you and record the answer, or use a CRM that links the source to each enquiry.

Should I include the agency’s fee in the ROI?

Yes. ROI answers the question “did the investment pay off?”, and the investment includes the budget paid to Google and the account management, whether in-house or external. Leaving out management gives a rosier picture than reality and can lead you to keep campaigns that, overall, don’t make a profit.