Google Ads Formula Calculator

Isaac Rudansky
A free video tutorial from Isaac Rudansky
Certified Google AdWords Pro |Co-founder of AdVenture Media
4.6 instructor rating • 4 courses • 203,120 students

Learn more from the full course

Ultimate Google Ads Training 2020: Profit with Pay Per Click

Google Ads 2020: How our clients have transformed their sales using Google Ads & get your Google Ads certification!

24:39:03 of on-demand video • Updated November 2018

  • Drive Consistent, Round-The-Clock Traffic To Your Website or Landing Page
  • Use Conversion Tracking To Determine The Value Of Your Ad Campaigns
  • Create, Develop and Optimize Your Own Profitable Google AdWords Campaigns
  • Remarket to Your Previous Website Visitors To Get Them Coming Back To Your Site
  • Advertise Your Products And Services Online Effectively
  • Monetize The More Than 6 Billion Daily Searches On Google
  • Boost Traffic and Increase Sales to Your Website
English [Auto] How do you glads fans and welcome back. I was gonna jump in right away and start talking about glads 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 as 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 ask 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 the client based on a conversion rate and outwards words how much can I pay for a conversion. And that's a pretty complicated question because even if you make a thousand dollars per sale let's say doesn't mean you could pay a thousand dollars per form submission right because not every forum's mission turns into a sale so you need some way of being able to quickly answer your client that question or answer that question for your client. How much money do I make when someone clicks my head. 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 our OAS Rovers 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 to be able to duplicate the tagline or the motto of our business venture media is salesmanship in pixels. And the reason well it's sort of a long story that goes back to Albert Lascar who is the father of modern advertising back he lived in. He was sort of popular in the 1920s 1930s he died in the late 40s. 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 to 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 sales person 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 came down to again salesmanship which at its core was selling profitably. And in order to be successful at at an advertising campaign in order before you ever say that your outwards 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 ASP and you need to know your profit margin for your products whether it's your own or your Clines and this formulas calculator is going to help you calculate some very key important metrics as you're assessing the health and the performance of your campaign. 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 10000 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 with 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'd like. But I just don't 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 the 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 a calculation for. Please just let me know and I'll be happy to add it to this. To the sheet. So the first one appears determine your max CPC bid. Right. So that's an important thing. I'm going to and we're going to have more lectures that really go into detail how a few three four different formulas for getting to what your max CPC bid should be. But we could go at it in different ways so if you know your revenue per click and your desired return and spend which you need to get from different formulas you can get your break even Maxy PC clicks all that's in my revenue per click is $10. Every time I get a click I earn $10 of revenue. That's the data what the data shows me my ads account to 350 percent are less than $2 and 86 cents and then I was like a pay per click. Right. Perfect. Beautiful it's scientific. Now how would you know your revenue per click OK so down here I have a formula for determining your revenue per clicks of 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 twelve thousand dollars in revenue total commercial 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 Adv. level and the key level how to find how many clicks you got. But say for example I got seven hundred and sixty five clicks for that $12000 on conversion value. So my revenue per click is $15 and 69 cents. Every single time somebody clicks every to every single time in the last 30 days somebody clicked an ad I generated an average of $5000 and 69 cents 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 is 89 cents. That way I can go back up here and say oh my revenue per click is 15 69. So I might break even CPC is 4:48 I cannot spend more than 4:48 on the click determining break even. 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 percent profit margin for every 10 dollars in sales and we are in the dollar I need a thousand percent our way. I mean and you know a 10 x return and that's been let's say my average profit margin is 25 cents 25 percent rather So I need a 400 percent if I'm earning 90 percent profit margins on my product I'm only I only have an expensive 10 percent. You're operating a really really high profit margin business. Then you need to have it one hundred eleven point one percent return on aspects you have a lot more wiggle room in your campaigns and 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 and add words so say my my cost per conversion and afterwards every single time and let's say my might the conversion action that I was tracking was a form submission. OK. I have a legion business I'm a service aide I'm a service business. This is sort of like what type of business we are as an agency. 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 Web site is submitting a form or even a phone calls I'll submit anything other than e-commerce let's say. So my cost per conversion and outwards and again we're assuming that the conversion tracking is set up properly. Say I spent $98 to get a form Simitian 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'd like to look at least 90 days with accurate data. So say my cost or conversion was $90 but what was my sales team conversion rate. Right. So let's say my sales team only converted 1 out of 10 lead so 10 percent. So my true cost per conversion my true cost per deal by true cost per customer was $980 say they could they could they converted 68 percent of leads then it drastically dropped down the true cost of conversion was only $144 still more than $98. So this assumes again and all of these formulas assume you have to have some good data somewhere you can have a good output without any good input. So you need to deliver for this formally and you need to know what your cost to conversion and Edwards was. You also need to know 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 this sales conversion rate and you should know your cost conversion and Edwards 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 breakeven CPA for forms. So I need to know my average profit per conversion rate that somebody that I need to know so how much money do I make and when I say conversion I mean when I close a let's let's say let's say I'm a personal injury attorney and yeah it ranges between five hundred or ten ten thousand dollars of course and go much more or not a personal attorney or a regular attorney. Traffic attorney so I can I can make between 5000 and 10000 so I know my average private conversion is the summer you know Seventy five hundred dollars. I see. OK. Now every time I get a lead on my web site for my for my traffic to my traffic attorney Web site 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 sale seems not perfect and I'm not perfect and I'm not perfect so I only close let's say 5 percent right. My take is point it's five percent. So that means my break even cost per conversion is $375. OK. I'm able to pay no more than $375 to get a conversion. If my average profit per deal is seventy five hundred dollars. Now if my if if I was in a business where my average profit bodyless 50 grand right that I could pay twenty five hundred dollars assuming that 5 percent rate if if my average profit conversion if I average profit per conversion per deal was 35 was the unit of $2 and my sales team conversion rate was 40 percent. Right. I'm sorry if my sales team conversion rate was 40 percent that I can pay $140 per performed Simitian in afterwards. Right that's my breakeven so if I'm if I'm in essence in in simple English in this scenario if I'm spending less than $140 on former admissions 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 missions how much can I pay to get these phone calls in Google Ads for my new ads campaigns. And then you have getting your CPC from C-p from cost per thousand impressions and it's just another formula for getting what your max CPC should be. CPM refers to cost per thousand impressions. Again you'd have to get this data from your google ads account what you can so say you're Clitheroe was 5 percent cost per thousand pressings 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 an hour here is show you do a quick brief Why are we as calculation the difference between Arnwine are we ask and we'll to 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 and you might not have ever created a Google account in your life right. But I want you to know that you were 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 up more formulas in your own version of the sheet. And then 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 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 to me leading to your advertising from profitability. Let's just be honest. Right. Hopefully our lives are more multidimensional and this I have a beautiful wife 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 businesses. 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 on the other side. Right yeah you could invest in this and that but OK. And if you look at the long term horizon there would be money in it more money. 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 a Google Ads watching this course listening to me talk with this amount of time which obviously is going to be painful to anybody who just asked my family members and my my my team and employees it 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 in that context understanding. Now going back into 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 grade. 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 is nothing in between. In my mind when it comes to advertising either you're making money you're making more money in sales and you're spending your positive are why you're successful it's as successful as it possibly can be yeah. And if it makes more money and more money greater if you're making less money from your ad campaigns over the course of a lifetime. Now I don't mean linear necessarily because of course a customer could be a customer or could could earn you a hundred dollars 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 evaluating you're spending more on your marketing and advertising than you are making then your campaigns are failing. It's not OK. It's not. Try harder next time. They're failing. And if you there 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 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 two years from now.