Is your Google Ads campaign profitable? How to measure ROI properly

Your monthly Google Ads report says 2,400 clicks and 61 conversions. The graphs point upwards. But is the campaign making you money?

Clicks and conversions on their own cannot answer that. To know whether Google Ads is profitable, you need to connect what you spend to the sales it produces, and to what those sales cost you to deliver. This article explains how to do that in plain terms, including for businesses where the sale happens weeks after the enquiry.

What ROI means for Google Ads

Return on investment (ROI) compares the profit you made with what you spent to make it. Google describes it as how much profit you have made from your ads compared to how much you have spent on them.

A simple version of the formula is:

ROI = (Revenue from ads minus Google Ads spend) ÷ Google Ads spend × 100

For example, if you spent R10,000 on Google Ads and the campaign brought in R30,000 in sales, this simple ROI is (R30,000 minus R10,000) ÷ R10,000 × 100 = 200%. These figures are illustrative.

Include the cost of delivering the sale

The simple version leaves out an important cost: what it took to deliver what you sold. Google's own example of the ROI calculation includes the cost of producing the goods as well as the ad spend. A more honest formula is:

ROI = (Revenue minus total costs) ÷ total costs × 100

Total costs include ad spend, the cost of the goods or labour, and any campaign management fees. Using the same illustrative example:

• Revenue from ads: R30,000
• Google Ads spend: R10,000
• Cost of materials and labour: R12,000
• Management fee: R3,000
• Total costs: R25,000
• Profit: R5,000
• ROI: R5,000 ÷ R25,000 × 100 = 20%

The campaign is still profitable, but 20% tells a very different story from 200%.

Why there is no single "good" ROI figure

You will find claims online about the "average" Google Ads ROI. Treat them with care. A good return depends on your margins, how much a customer is worth over time and whether a first sale tends to lead to repeat work. A low-margin product may need a much higher return on ad spend to break even than a high-margin service.

A more useful question is: what is the most I can afford to pay to win a customer and still make a profit? Once you know that number, you can judge your campaign against your own business, not someone else's average.

ROI, ROAS and cost per lead: three different numbers

These terms are often mixed up. Each answers a different question.

• ROAS (return on ad spend) is conversion value divided by ad cost. Google's example: R5 in sales for every R1 of ad spend is a ROAS of 500%. In our example, R30,000 ÷ R10,000 gives a ROAS of 300%. ROAS is useful for bidding and for comparing campaigns, but it ignores your other costs.
• ROI looks at profit after all costs. It answers whether the activity is worth doing at all.
• Cost per lead is ad spend divided by the number of genuine enquiries. If R10,000 brought in 40 enquiries, each one cost R250. This is the number that a Target CPA (target cost per action) bidding strategy aims to control.

For an online shop, ROAS and ROI are usually the main measures. For a business that sells through quotes, calls and meetings, cost per lead is the first number you will see, but it only becomes meaningful once you know what a lead is worth.

Start with conversion tracking

None of this works without conversion tracking. Google defines a conversion as a customer action that is valuable to your business. For most South African SMEs, that means:

• Form enquiries and quote requests on your website
• Calls made directly from your ads
• Calls to the phone number on your website
• Online purchases, with the order value

Only count actions that are genuine signs of interest. Counting page views or button clicks as conversions makes reports look better while hiding the real picture. Check for spam form submissions too, since they inflate your numbers.

Putting a value on an enquiry

If you sell through enquiries, the sale and the payment happen later. You can still estimate what each lead is worth with two figures from your own records:

Lead value = average sale value × the share of enquiries that become sales

Imagine an aircon installer whose average job is worth R18,000 and who wins about 1 in 4 quotes. Each enquiry is worth roughly R18,000 × 25% = R4,500 in revenue. If the gross profit on an average job is R6,000, each enquiry is worth about R1,500 in gross profit. If the cost per lead is R250, the campaign is comfortably profitable. If it rises to R2,000, it is not. These numbers are illustrative.

Google's conversion value calculator works on the same principle, and Google advises against leaving conversion values blank. Once you add a value, your reports can show conversion value and ROAS, and value-based bidding becomes possible. Note that a changed value only applies to conversions recorded after the change.

Offline conversions: closing the loop

Estimated lead values are a good start. The more accurate approach is to tell Google which leads actually became customers. Google calls this importing offline conversions: sending results that happened outside your website, such as a phone sale or a signed quote, back into Google Ads so they can be linked to the ad that started the journey.

In plain words, it works like this:

1. When someone clicks your ad, Google adds a click identifier (called a GCLID) to the visit, and your website form can store it with the enquiry.
2. You record what happens to the enquiry in your CRM or lead list.
3. When the deal closes, the result and its value are sent back to Google Ads, either with the click identifier or through enhanced conversions for leads, which matches using details such as the customer's email address in a scrambled (hashed) form.

The benefit is that you can see which keywords bring in paying customers, not just enquiries. Smart Bidding can then learn from real sales. Google has been simplifying this setup during 2026, so the exact steps in your account may differ from older guides.

A simple monthly ROI check

• Total your Google Ads spend and any management fees
• List conversions by type, with spam and duplicates removed
• Check in your CRM how many of those leads became sales
• Add up the revenue and gross profit from those sales
• Work out cost per lead, cost per sale, ROAS and ROI
• Compare the results with your break-even cost per customer

Where technology makes a meaningful difference

Most of the work in measuring ROI is joining up information that sits in different places: the ad account, the website, the phone and the sales records. When forms capture the click identifier automatically, leads are logged in one place and a simple dashboard pulls the numbers together, the monthly check takes minutes instead of an afternoon of spreadsheets.

How Kreativworx can help

Kreativworx manages Google Ads for South African businesses with conversion tracking and reporting set up from the start. We can also connect your website forms, lead management and reporting so you can see which campaigns produce sales, not just clicks.

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