Calculating ROI for Paid Ad Campaigns in HubSpot

One of the most frequent things marketing managers and heads of marketing departments want to know is “How much do Google Ads cost?”

It’s a good question: there are serious benefits on offer from a well-run campaign, but with so many variables involved in Ads campaign pricing it can be hard to comprehend the cost-benefit relationship.

In this blog post, we’ll illuminate the costs associated with Google Ads. We'll provide an exhaustive analysis of the variables affecting costs. After reading you’ll have the knowledge you need to make informed PPC strategy decisions and to understand the expense relative to the potential returns.

Here’s what we’ll cover in this piece: 

• Understanding Google Ads
• The Mechanics of Google Ads Pricing
• Average Google Ads Cost UK and Worldwide
• Key Variables Influencing Google Ads Costs
• Using the HubSpot Google Ads Cost Calculator
• How to Measure Google Ads Cost and ROI with HubSpot
• Strategies for Minimising Google Ads Cost

Understanding Google Ads 

Google Ads is a platform which displays adverts throughout Google’s properties, most commonly on SERPs.

When you run ad campaigns through Google Ads, your ads will have the potential to show in relevant Google searches. Google uses various factors to determine relevance and ad position.

The formula Google uses to determine Ad Rank, the metric that determines which position your ad will show, is: 

Ad Rank = Maximum Bid x Quality Score

Taking Quality Score into account alongside bid gives advertisers with lower budgets a way to compete with bigger spending competitors.

The Mechanics of Google Ads Pricing

Google Ads pricing is dynamic, with several factors influencing cost per click (CPC)

• Your maximum bid
• What your competitors are spending
• How relevant your advert is to the search where it’s displayed
• The strength of the commercial intent behind a search

This means that you won’t necessarily pay your maximum bid if one of your ads is clicked. You’ll pay the amount Google has arrived at via its ad cost formula, which is:

Ad Cost = Ad Rank of the ad below yours / Quality Score + $0.01

Let’s break each element down in more detail: 

Quality Score

As the name suggests, this metric indicates the quality of your ad.

Ads are rated on a keyword basis on a scale of 1-10, with the score based on three components:

• Expected click-through rate (CTR): How likely users are to click on the ad
• Relevance: How well the ad aligns with the user’s search intent

• Landing page experience: How useful and relevant the landing page content and experience is

The result is based on comparisons with other ads that have been displayed for the same keyword in a 90-day period.

Note: You can read more about Quality Score on the Google Ads Help site, here.

Ad Rank

This metric determines whether your ad will show and, if so, in which position.

Because this metric takes into account more than just your bid amount, it makes it possible for an ad to show above a competitor who is willing to pay more if the ad is considered to be of higher quality.

More variables are taken into account to calculate ad rank, including:

• Bid Amount
• Ad quality at the time of auction
• Competitiveness of the auction
• The user’s location and device 
• The time of the search
• Other SERP content including paid and non-paid results

Note: You can read more about Ad Rank on the Google Ads Help site, here.

Final CPC

Once the two metrics above are taken into account, the final CPC is set. This is what you’ll pay if someone clicks on your ad.

You can choose between manual or automatic bidding. With the former you choose how much you’d like to bid; with the latter, Google attempts to get as many clicks as possible within the budget you’ve set.

If you’re concerned about going over budget, remember that with a Smart Campaign, you can set a monthly budget. This will limit the total ad spend to the specified amount.

Note: You can read more about CPC on the Google Ads Help site, here.

Average Google Ads Cost in the UK 

If you’re curious about average ad costs, bear in mind that there are a lot of variables at play here so the numbers you see on your campaigns might be very different.

This graph from Statista shows the average CPC for Google Ads in various industries in May 2021, in US dollars:

As you can see, there is a huge variance between the industries shown. 

Note: If you’re looking for your average ad CPC, you can see that in your Google Ads dashboard.

Key Variables Influencing Google Ads Costs

We mentioned a number of variables at play when determining CPC for ads. Some of the most prominent variables are explored below: these are good things to think about when starting a campaign from scratch, or when looking to refine an existing campaign.

Account Management

The effectiveness of your campaign configuration and account management can make a huge difference to ad costs. Working with a specialist PPC agency is a way to easily tap into more effective campaign management - more on this later.

Industry 

The industry your business operates in will have an impact on average CPC, because average lead value is taken into account when calculating costs. In an industry where the average order value is high, CPC is likely to be higher as well. And vice versa.

Schedule

The greater the number of advertisers bidding for an ad spot, the higher the CPC will be. You have the option to schedule ads for specific times of day, and advertising out of peak time can often come with lower CPC.

Ad Type

There are different types of ads, and each comes with its own cost considerations. Search Ads (the ones that appear in traditional SERPs) have the highest CPC, whereas Shopping Ads and Display Network Ads can come with a lower bill.

Device

Google will charge a higher CPC for ads clicked on a device that’s more likely to lead to a conversion. B2C keywords are likely to cost more on mobile because consumers Google things while they’re out and about, whereas B2B ads will have a higher CPC on desktops.

Using the Google Ads Cost Calculator

Even when you know how CPC is calculated, it can still feel tricky to arrive at the amount of money you’ll be spending on your campaigns.

Thankfully, HubSpot offers an Ads ROI calculator. This tool takes your budget, expected CPC and a few other metrics to calculate an indicative ROI on ad spend.

While the numbers are for illustrative purposes only, it’s a useful way to conceptualise potential costs and advise campaigns.

Your results are shareable, too, meaning the calculation can be saved and shared with decision-makers on your team.

How to Measure Google Ads Cost and ROI with HubSpot 

Watch the PPC training video here:

First, we’ll take a look at setting your ROI preferences in the HubSpot settings:

How to Calculate ROI for Ads in HubSpot

1. Login to HubSpot
2. Go to Marketing > Ads in the top nav
3. Click the Settings icon
4. Click ROI
5. Choose from one of two settings:
1. Estimate revenue: provide your average sale price and average contact to customer rate, and HubSpot will estimate campaign ROI 
2. Revenue from deals: HubSpot draws on real data attached to active and closed deals to generate real-time ROI figures

The setting you choose here will determine what you see in the ROI section of ad campaign reports within HubSpot.

Now let’s take a look at how to see costs associated with your ad campaigns in the HubSpot dashboard.

How to Measure Google Ads Cost in HubSpot

HubSpot offers sophisticated reporting tools that can draw in data from connected Facebook, Google, and LinkedIn Ad platforms.

Once you’ve connected one or more of these accounts, you will be able to view ad campaign reports. Here’s how to find them:

1. Login to HubSpot
2. Go to Marketing > Ads in the top nav

You’ll see two boxes with the following metrics:

• Impressions
• Clicks
• Contacts
• Deals
• Amount spent
• ROI

Percentage values will be shown between Impressions and Clicks, Clicks and Contacts, and Contacts and Deals, to show the number of people progressing through the journey.

You’ll also see a cost per click and per contact based on your ad data.

Strategies for Minimising Google Ads Cost

We’ve seen how Ads work, but the theory isn’t much use without actionable tips. In this section, you’ll find 7 tips that your business can implement today to start improving ROI on ads.

1. Improve Your Quality Score

As we’ve seen, Quality Score takes into account your ad copy and landing page experience. Both of these areas are completely within your control and should be the first place you start looking to minimise ad costs.

Ad copy that concisely demonstrates relevance to a user’s search query is more likely to be clicked than vague and garbled content. And a landing page that quickly and seamlessly directs a user to their desired outcome is more likely to lead to a conversion than a busy, confusing page.

2. Quality Keyword Research

High-quality keyword research is the foundation of an effective PPC campaign. Knowing which terms are likely to work for your business means that you’re only displaying ads in these relevant search results, rather than taking a scattergun approach that’s liable to bring in poor-quality engagement.

Google offers a modified broad match setting that you can use to get started. This will give ads the option of showing in search results that are related and relevant to the original keyword term.

3. Ongoing Monitoring of Keywords

An effective Ad campaign needs ongoing refinement. Monitoring how ads are performing and which terms are doing well will let you make incremental adjustments to budgets, keywords, ad content, and more.

While this ongoing commitment can seem daunting, this is where the real ROI increases are achieved. 

4. Use Negative Keywords

Google gives you the option to not appear in searches where specific words or search terms are used. This is useful for minimising clicked ads in searches where your ad would be irrelevant to the user.

One example is to exclude terms related to your company name: if your company name is a real word, there are likely to be lots of search terms related to the generic meaning rather than your company. Isolating and excluding words that indicate the search relates to this meaning prevents your ads from showing up.

5. Use Assets

Assets are additional content pieces that can increase the appeal of and engagement with your ads. Google automatically selects assets it thinks are relevant for certain ads, and you’re able to select assets yourself.

Google gives comprehensive information on selecting assets based on your goals here.

You can also remove assets from your campaigns, or turn off account-level asset automation completely.

6. Use Bid Modifiers

Bid modifiers are built into the Google Ads platform, and let you set granular bidding criteria based on the nature of a search.

For example, you can set a higher bid amount for users who have recently visited a specific page on your site (an indication that they’re a warmer lead); or you could set a lower bid amount for users in a certain age group (who your data shows are less likely to become customers).

7. Leverage PPC Expertise

Working with a PPC agency is perhaps the best way to minimise ad costs, as their experience and expertise in setting up and monitoring campaigns will lead to optimised performance.

Whether you’re starting from scratch or looking to fine-tune an existing ad campaign, we’d recommend having a conversation with experienced PPC providers as a way to improve your campaign results.

Case studies 

As PPC experts we’ve delivered results to businesses all across the UK. Here are two of many examples.

Access Commercial Finance

Our involvement saw the ACF website generate 150+ leads per month, leading to a £7m sales pipeline from online leads.

In Conclusion

There isn’t a simple answer to the question of how much Google Ads cost, but there are tried and tested ways of bringing costs down and improving campaign ROI. And while these methods are within your reach, many businesses find that working with PPC experts is the quickest and most reliable way to realise these benefits.

If you’re interested in taking your Google Ads campaigns to the next level, get in touch for a consultation. We’ll talk through your goals and current campaign status to identify the most efficient route forward.