| A | B | C | D | |
|---|---|---|---|---|
1 | Corresponding presentation on SlideShare |  | go.trueclicks.com/smart-targets-dollars | |
2 | Target setting & health checks for Ecommerce accounts | |||
3 | Inspired by the formula calculator from Isaac Rudansky's Ultimate Google Ads Training | |||
4 | Fill in the light blue cells (your input) | |||
5 | Don't change the pink cells (our output) | Want to edit this sheet? Click on "File -> Make a copy" so you can edit and share your own version | ||
6 | ||||
7 | 1. Determine your Target ROAS (Conv. value / cost) | Your values | Comments | |
8 | Average profit margin as a percentage of revenue | 50% | For your margin calculation, don't include costs that don't change when selling additional products, like salaries and rent. The margin here should be based on variable product-related costs such as cost of goods, fulfilment, commissions, etc. | |
9 | Percentage of that margin you're willing to invest in acquisition | 60% | For most advertisers, 50% to 70% is the profit-maximizing range. A higher percentage will allow you to bid more agressively and capture more market share, but it will be at the expense of profitablity. 100% means breaking even. And it can't be 0% of course. | |
10 | Your target ROAS | 3.3 | We use the number with one decimal notation as used in the Google Ads "Conv. value / cost" column (which is ROAS). So 5.0 corresponds with 500% and both mean that you want $5 of revenue for every $1 invested in ads. | |
11 | ||||
12 | 2. Determine / health check your average CPC | Your values | Comments | |
13 | Conv. value / click | $5.00 | This is a column in Google Ads, assuming you track conversion value (revenue) correctly. | |
14 | Your target ROAS | 3.3 | From cell B10 above | |
15 | Your average CPC should be | $1.50 | If you use manual bidding, your Max CPC can be a bit higher than this value. If you use Smart Bidding, you can check if the average CPC is close to this value. | |
16 | ||||
17 | 3. Health check your ROAS target | Your values | Comments | |
18 | Conversion rate | 2.00% | You can use actual values or realistic estimates in these cells. | |
19 | Average CPC | $0.75 | ||
20 | Average Order Value | $120 | ||
21 | This combination will give you the following ROAS | 3.2 | You can use this ROAS to health check your target ROAS from part 1. - If it's lower, you need to work on increasing your conversion rate, quality score (to decrease CPC) and average order value. Or on the business side: increasing your margin and/or the percentage that you're willing to invest in acquisition. - If this value is higher than your target from above, you can be more agressive in your acquisition strategy (cell B9). | |
22 | ||||
23 | 4. Health check your revenue target | Your values | ||
24 | Cost (Ad spend) | $10,000 | You can use actual values or realistic estimates in these cells. | |
25 | Average CPC | $0.50 | ||
26 | Average Order Value | $70 | ||
27 | Conversion rate | 2.50% | ||
28 | Clicks | 20,000 | This assumes you can spend all the cost for the given average CPC. This may not be possible if there isn't enough search volume or if the average CPC entered is lower than what's needed for decent visibility on the SERP. | |
29 | Transactions | 500 | Multiplying clicks with the conversion rate. | |
30 | Revenue | $35,000 | Multiplying transactions with the average order value. | |
31 | ROAS | 3.5 | Dividing revenue by cost. | |
32 | ||||
33 | 5. Convert your ROAS target to a CPA target | Your values | Comments | |
34 | Average order value | $120 | For campaigns that have between 15 and 50 conversions/month, you may want to consider using target CPA instead of target ROAS (Smart Bidding). This assumes that the products you sell in these campaigns have a similar average order value and target ROAS. | |
35 | Your target ROAS | 4.0 | ||
36 | Your corresponding target CPA | $30 | Dividing average order value by target ROAS. | |
37 | ||||