Google Ads Formula Calculator

Heidi. Google ads fans. And welcome back. I was going to jump in right away and start talking about Google ads, what it is, where ads show up, some of the basic fundamentals. But I want to first actually start by giving you my free AdWords formula calculator or Google ads formula calculator. I think it's really helpful tool and it's something that you'll be able to reference as you go through the course. Have you ever asked yourself or has a client ever asked you, what's the most I can pay for a form submission, right? Based on my results, based on the amount of money I make in a client, based on my conversion rate and AdWords, how much can I pay for a conversion? And that's a pretty complicated question, because even if you make $1,000 per sale, let's say, it doesn't mean you can pay $1,000 per form submission, right? Because not every form submission turns into a sale. So you need some way of being able to quickly answer your client that that that question or answer that question for your client. How much money do I make when someone clicks my add? Another good question and a very, very popular question and a question that all of you should be able to answer for your own business or for your clients business in your sleep. What's the minimum roas roas return on ad spend I need to break even. At what point am I losing money? At one point am I making money in the campaigns? And before I show you my my formulas calculator, which you're going to have and you will be able to duplicate the tagline or the motto of our business adventure media is Salesmanship in Pixels. And the reason well, it's sort of a long story that goes back to Albert Lasker, who was the father of modern advertising back he lived in he was sort of popular in the 1920s, 1930s. He died in the late forties. He related to advertising as salesmanship in print. And that was something which really struck a chord with him because he understood that what we're trying to do with advertising is just salesmanship magnified in print with thousands of people, and salesmanship back then meant basically door to door canvassers selling things at a profit. And all the tools and all the techniques that a door to door salesperson had to evaluate what's the most profitable route, how much money to sell these items for? What are my expenses? What type of psychological technique is going to work the best here. But fundamentally, it came down to, again, salesmanship, which at its core was selling profitably. And in order to be successful at an advertising campaign, in order before you ever say that your AdWords campaign or your Google ads campaign was a success, you need to be able to show that you're profitable. And in order to get to the point where you're profitable and being able to show that you're profitable, you need to know your metrics. You need to know return on Aspen, you need to know your profit margin for your products, whether it's your own or your clients. And this formula is calculator is going to help you calculate some very key important metrics as you're assessing the health and the performance of your campaign. So let me just jump in here. I'm going to give you access to this sheet and you need to duplicate it. I literally get like I've gotten over 10,000 requests for access to this sheet. Don't request access to the sheet, because if I if I give you access to this base sheet, then if you modify something, it's going to modify it for everybody else. So this is a locked sheet, but you can make a copy of it for yourself and and make as many copies as you like and play around with it as much as you like. But I just don't request access because I'm not going I'm going to unfortunately deny it just for the sake of everybody else having a good experience. So in this sheet we have a few different key formulas and I'm going to add to this sheet as time goes on. And if you guys have any specific requests for a useful formula, please ask me because I could do it really quickly. I'm happy if you guys have a specific formula or a specific metric you'd like to have calculation for, please just let me know and I'll be happy to add it to this to the sheet. So the first one up here is determine your max EPC bid, right? So that's an important thing. We're going to and we're going to have more lectures that really go into detail how three, four different formulas for getting to what your max EPC bid should be. But we could go at it in different ways. So if you know your revenue per click and your desired return on ad spend, which you'll need to get from different formulas, you could get your break even max ABC Click. So let's say my revenue per click is $10. Every time I get a click, I earn $10 of revenue. That's the that's what the data shows me in my ads account. I need a 350% rise, then $2.86 is the most I can pay per click. Right. Perfect. It's beautiful. It's scientific. Now, how would you know your revenue per click? Okay, so down here I have a formula for determining your revenue per click. So total conversion value. And again, you need to have conversion tracking set up in your account in order to know your total conversion value. So say over the course of 30 days, I generated $12,000 in revenue, total conversion value from my campaigns. And I look into my Google ads account and I and I pull my total amount of clicks. And I'm going to show you at the campaign level, the ad group level and the keyword level, how to find how many clicks you've gotten. But say, for example, I got 765 clicks for that 12,000 in conversion value. So my revenue per click is $15.69 every single time. Somebody clicks every every single time. In the last 30 days, somebody clicked an ad, I generated an average of $15.69 of conversion, of course, of revenue, of course, some of clicks. Some clicks didn't turn into a conversion, so that was zero. But on average, every click accounted for $15.69. That way I can go back up here and say, oh, my revenue per click is 1569. So I, my breakeven CPC is 448. I cannot spend more than 448 on a click determining break even. Yes, this is a big one. You need to know your profit margin in order to know what your return on Aspen has to be, you need to know what your average profit margin is. So if I have a 10% profit margin for every $10 in sales, I only earn a dollar. I need a 1,000% raise. I mean, I need a ten x return on ad spend. Let's say my average profit margin is $0.25, 25%. So I need a 400% if I'm earning 90% profit margins on my products, I'm only I only have an expense of 10%. So you're operating at a really, really high profit margin business. Then you only need to have it 111.1% return on ad spend. So you have a lot more wiggle room in your campaigns in that case, moving down to true cost per conversion for forms. This is one of my favorite, favorite formulas. So I look at my cost per conversion in AdWords. So say my my cost per conversion in AdWords every single time. And let's say my, my, the conversion action that I was tracking was a form submission. I have I'm a legion business. I'm a service I'm a service business. This is sort of like what type of business we are as an agency. But let's say you're a plumber or let's say you're a school, right? Or any, any, any business where the conversion action on the website is submitting a form or even a phone call. It's also true. But anything other than E commerce, let's say so my cost per conversion in AdWords and again, we're assuming that my conversion tracking is set up properly, say I spent $98 to get a form submission on average over whatever historical time frame I'm looking at, whether it be 30 days, 60 days, 90 days. I like to look for these types of things. I like to look at least 90 days with accurate data. So let's say my cost per conversion was $90, but what was my sales team conversion rate? Right. So let's say my sales team only converted one out of ten leads, so 10%. So my true cost per conversion, my true cost per deal, my true cost per customer was $980. Say they could. They converted 68%. Of Leeds, then it drastically drops down. My true cost per conversion was only $144, still more than $98. So this assumes, again, all of these formulas assume you have to have some good data somewhere. You can't have a good output without any good input. So you need to know for this formula, you need to know what your cost per conversion in AdWords was. You also need to know what your sales team conversion rate is. And those are two relatively easy things to track. If you're if you're worth your weight as a business person or if you're working at a business or you're doing your own business, or this is for your clients, you should know the sales team conversion rate and you should know your cost per conversion and AdWords. Another one of my all time favorite is Break even CPA for forms. What's the most I can pay for a form submission? Right. So what's my break? Even CPA for forms. So I need to know my average profit per conversion. Right. That's something that I need to know. So how much money do I make? And when I say conversion, I mean when I close a lead. So let's say let's say I'm a personal injury attorney and yeah, it ranges between 510, 10,000. Of course, you can go much more or not a personal attorney or a regular attorney, traffic attorney, so I can make between 5010 thousand. So I know my average profit conversion is somewhere 70 $500, let's say. Okay. Now, every time I get a lead on my website for my for my traffic or my traffic attorney website, you know, there these leads are submitting them to all different types of attorneys. And it's very hard to close a deal. And my sales team is not perfect and I'm not perfect and my website is not perfect. So I only close, let's say 5%, right? My is point, it's 5%. So that means my break even cost per conversion is $375. I'm able to pay no more than $375 to get a conversion if my average profit per deal is 70 $500. Now, if my if if I was in a business where my average profit per deal was 50 grand, right then I could pay $2,500 assuming that 5% rate. If if my average profit conversion if my average profit per conversion per deal was 3500 $50 and my sales team conversion rate was 40%. Right. I'm sorry if my sales team conversion rate was 40%, then I could pay $140 per perform submission in AdWords. Right. That's my breakeven. So if I'm if I'm in essence in simple English in this scenario, if I'm spending less than $140 on form commissions, I'm making money. If I'm spending more than $140, I'm losing money. And now you're starting to get scientific. Now you can get on the phone with a client and actually sound intelligent. Now you're able to actually go to your boss and sound intelligent and show him real numbers. Now you're able to look at your own business and know, Am I making money? Am I losing money? How much can I pay to get these forms commissions? How much can I pay to get these phone calls in Google ads for my Google ads campaigns? And then you have getting your CPC from CPA from cost per 1000 impressions and click rate. It's just another formula for getting what your Mac CPC should be. CPM refers to cost per 1000 impressions. Again, you'd have to get this data from your Google ads account, which you can so say your click through rate was 5% cost per thousand, prices was $10. That would give you a CPC of $20. It's just another way of finding your actual CPC. So here's four or five different formulas that you could use. And over here I'll show you a quick, brief ROI and ROI calculation, the difference between ROI and race, and we'll get into that in more detail. But I just want to walk you through some of these formulas. This is probably for a lot of you, this is more advanced than what you need to get right now, because you might not you might not have ever created a Google Ads account in your life. Right. But I want you to know that you're going to have this formula sheet by your side. It's going to be an invaluable resource for you as you progress to this course. It's for you. I want you to enjoy it. I want you to build out more formulas in your own version of the sheet. And if again, if you do have any formulas that you'd like me to build in there for you, I have a ton of formulas that we that we use. I'm happy to build in some additional ones and it doesn't take much time and it doesn't take much time for me to do it. I'm happy to help out. So use it, keep it as a reference. And I think it's going to be very, very helpful. Even if you use one of these formulas, the next time you're on the phone with the client, I think you'll already be in a much better position because you'll start realizing to talk the point here, start talking and relating to your advertising from profitability. Let's just be honest, right? Hopefully our lives are more multi dimensional than this. I have a beautiful wife, I have a beautiful son. I have lots of different things I like doing. I love skiing. It's my favorite time of year. This is it's it's it's October now and ski season is right around the corner. I can't wait to go skiing. I play music, but let's just call a spade a spade. Business is about making money. Your advertising campaigns are. They need to make money. They need to be profitable. That's what everyone expects. That's what this is about. Your business is I sort of view it as a little bit of a machine where there's money in and you need to have more money coming out on the other side. Yeah, you could invest in this and that, but and if you look at the long term horizon, there should be money in and more money out on the other side and these formulas and starting to even think about it in that way and understanding that there's no other end goal but that getting good at Google ads, watching this course, listening to me talk for this amount of time, which obviously is going to be painful to anybody, just ask my my. Family members and my my my team and employees. It's just so you could make more money from advertising than you're spending on the advertising. That's the whole point. So perceiving these formulas and that context, understanding now going back into your Google ads account and your other advertising efforts and maybe reassessing a little bit from that perspective. Evaluating success. There's nothing there's no gray there's really no gray area in advertising. It's it's and it's not about winning awards for creativity. It's not about how cool a landing page looks. It's about how well it converts, how much money does it make, right? So there's either failure and their success. There's nothing in between, in my mind, when it comes to advertising, either you're making money, you're making more money in sales than you're spending. You're positive ROI. You're successful. It's as successful as it possibly can be yet. And if it makes more money, more money greater if you're making less money from your ad campaigns over the course of the lifetime. Now, I don't mean linear necessarily, because, of course, a customer could be a customer could could earn you $100 today. But over the course of three years, that customer could earn you $900. So you need to look at the full lifetime value LTV of a client. But if overall, if over the lifetime of whatever you're you're evaluating, you're spending more on your marketing and advertising than you are making, then your campaigns are failing. It's not okay. It's not try harder next time they're failing. And if if they're making more money, they're succeeding. And these formulas will help you start evaluating your whole advertising ecosystem in that context. And I hope you find it incredibly useful. I know that when we train new people in, they use these formulas all the time. I know that my clients enjoy talking about these formulas. When you're able to talk about them in actual plain English, it's it's a really important thing. So that's that. Enjoy the sheet. I will see you guys very soon in the very next lecture when we talk about what in the world Google ads even is. Cheers for now.