Google Shopping ads are a popular advertising format for e-commerce businesses to promote their products and drive sales. As with any advertising campaign, it’s important to measure the effectiveness of your Google Shopping ads using key performance indicators (KPIs). By tracking KPIs, you can gain insights into how your ads are performing, and identify areas for improvement. In this context, KPIs refer to measurable metrics that help evaluate the success of your Google Shopping ads, such as click-through rate, conversion rate, cost-per-click, and return on ad spend. In this article, we’ll explore some important KPIs for Google Shopping ads, along with formulas and examples of how to calculate them using Google Sheets.
Click-through rate (CTR):
Formula: =Clicks/Impressions
Explanation: This formula divides the number of clicks your ad received by the number of times your ad was displayed (impressions). The resulting percentage is your CTR.
Cost-per-click (CPC):
Formula: =Cost/Clicks
Explanation: This formula divides the total cost of your ad campaign by the number of clicks your ad received. The resulting figure is your average cost-per-click.
Conversion rate:
Formula: =Conversions/Clicks
Explanation: This formula divides the number of conversions your ad received by the number of clicks it received. The resulting percentage is your conversion rate.
Cost-per-conversion:
Formula: =Cost/Conversions
Explanation: This formula divides the total cost of your ad campaign by the number of conversions your ad received. The resulting figure is your average cost-per-conversion.
Return on ad spend (ROAS):
Formula: =Revenue/Cost
Explanation: This formula divides the revenue generated by your ad campaign by the total cost of your campaign. The resulting figure is your ROAS.
Average order value (AOV):
Formula: =Revenue/Orders
Explanation: This formula divides the total revenue generated by your ad campaign by the number of orders received. The resulting figure is your average order value.
Cost of goods sold (COGS):
Formula: =Total_cost_of_goods_sold/Number_of_orders
Explanation: This formula calculates the average cost of goods sold (COGS) per order, by dividing the total cost of goods sold by the number of orders received.
Cost per thousand impressions (CPM):
Formula: =Cost/Impressions*1000
Explanation: This formula calculates the cost per thousand impressions (CPM), which is the cost you pay for every 1000 times your ad is displayed. It’s calculated by dividing the total cost of your ad campaign by the number of impressions and then multiplying by 1000.
Click-through conversion rate (CTCR):
Formula: =Conversions/Clicks*100
Explanation: This formula calculates the click-through conversion rate (CTCR), which is the percentage of clicks that result in a conversion. It’s calculated by dividing the number of conversions by the number of clicks and then multiplying by 100.
Return on investment (ROI):
Formula: =(Revenue – Cost)/Cost
Explanation: This formula calculates the return on investment (ROI) for your ad campaign. It’s calculated by subtracting the total cost of your campaign from the revenue generated and then dividing it by the total cost. The resulting figure is a percentage that represents the return on your investment.
Ad spends as a percentage of revenue:
Formula: =Cost/Revenue*100
Explanation: This formula calculates the ad spend as a percentage of revenue, which is the proportion of your revenue that is spent on your ad campaign. It’s calculated by dividing the total cost of your campaign by the revenue generated and then multiplying by 100.
In conclusion, tracking key performance indicators (KPIs) is crucial for evaluating the success of your Google Shopping ads campaign. By monitoring KPIs such as click-through rate, conversion rate, cost-per-click, return on ad spend, search impression share, click share, average cost-per-thousand impressions, product group performance, and benchmark max. CPC, you can gain insights into the effectiveness of your ads, and make data-driven decisions to optimize your campaign. By regularly analyzing and refining your KPIs, you can improve the performance of your Google Shopping ads, increase your return on investment, and achieve your business goals. Therefore, understanding and utilizing KPIs for Google Shopping ads is a key element for the success of any e-commerce business.
Looking to optimize your inventory management? Check out our guide to 15 key performance indicators (KPIs) for inventory management, complete with formulas and explanations.
