Return on ad spend (ROAS) measures how much revenue your advertising generates for each dollar you spend. In Google Ads, ROAS isn’t just a finance metric; it signals whether your campaigns are truly profitable or quietly draining your budget.
Google Ads platform still shows great results overall. About 63% of people click on Google ads. The average return on ad spend (ROAS) is around 200%. However, competition and changes in privacy mean advertisers need to be smarter to keep growing.
This article explains ROAS and why it is important in today’s digital world. It also shares proven ways to boost your returns from Google Ads. Whether you’re a Shopify Merchant or not, a well-structured and strategically managed Google Ads campaign may offer a worthwhile opportunity to improve your advertising results.
What Is ROAS?
ROAS is calculated as total revenue divided by advertising spend. Many industries consider a ROAS of 4:1 (or $4 back for every $1 spent) to be strong.
ROAS formula: Revenue ÷ Ad Spend = ROAS
Or use our free ROAS calculator.
Industry benchmarks vary. A 2022 study by Insider Intelligence and Perpetua found that average returns per dollar spent varied a lot. Appliances had a return of $3.63. Beauty products returned $3.01. Electronics had a return of $3.93. Sports and outdoors items returned as high as $4.98.
Other categories also showed different returns. These variations underscore that your “good” ROAS target should reflect your specific margins, pricing and customer lifetime value rather than a one‑size‑fits‑all ratio.
Why ROAS Matters Today
- High adoption and expectations. Over 80% of businesses worldwide run Google Ads, and more than 63% of users click on those ads. Ads remain integral to discovering products and services.
- Rising costs and competition. Google search ads average a 6.66% click‑through rate, but industries like legal and dental face CPCs above $7.85. Advertisers must maximize revenue from each click to maintain profitability.
- Benchmarks for success. Median ROAS across Google advertising campaigns hover around 3.52, outperforming platforms like Facebook (2.21) (Designrush.com). Knowing these baselines helps you set realistic goals.
- Changing privacy and AI trends. With third-party cookies going away and AI ad systems changing, advertisers need better first-party data. Advertisers also need to cultivate smarter automation to stay ahead.
How ROAS Improvement Works
1. Understand and Set Your Breakeven ROAS
Before optimizing, calculate the minimum ROAS needed to cover costs. A breakeven ROAS = 1 ÷ profit margin. For example, a 50% margin requires a 2:1 ROAS to break even. Knowing your baseline prevents you from scaling unprofitable campaigns. It’s also worth noting that some companies may be open to temporarily lower ROAS to aggressively increase market share.
2. Master Audience Targeting & Segmentation
Audience targeting is the foundation of high‑ROAS campaigns. Past customers who’ve purchased multiple times typically convert 50–70% better than cold prospects. Segment audiences by purchase history, demographics and behaviors; then craft separate ad groups and creatives for each segment. Lookalike audiences built from your top 20% of customers can produce 2–3x higher conversion rates and always warrant testing.
3. Optimize Keywords & Bidding
Regularly audit your search term reports and adjust bids based on ad performance. Use smart bidding tools like Target ROAS, but ensure you have at least 30 conversions per month for machine learning models to work effectively (Google).
Add negative keywords to block unwanted clicks. Focus on high-intent queries like “buy,” “price,” and “brand model.” This will help attract users who are ready to make a purchase.
4. Improve Ad Copy & Creative
Your message must match user intent. Test multiple ad variations and should aim to create three ads per ad group. Keep copy text clear and benefit‑oriented, include relevant keywords, and always feature a strong call to action (CTA).
Use images or videos that connect with your audience. Dynamic content made for specific groups can increase click-through rates by 30% or more.
5. Enhance Landing Pages
A click means little without a conversion. Align landing pages with your ad’s promise (e.g., offer matching headlines, images and calls to action). Include trust signals like testimonials and guarantee policies, and always optimize for mobile screens and speed.
Shopify says that bad landing pages lower quality scores and raise advertising costs. Brands that improved their pages saw faster load times and higher ROAS.
6. Track & Measure Conversions
You can’t improve what you don’t measure. Set up conversion tracking in Google Ads (through the Goals → Conversions menu) and ensure each action is assigned a value. Import sales data from your CRM or ecommerce platform so you can optimize for revenue, not just leads or clicks. Without accurate data, smart bidding and automated rules can’t perform.
7. Retarget & Increase Lifetime Value
Retargeting campaigns keep your brand top‑of‑mind. Use remarketing lists for search ads (RLSA) to adjust bids for past visitors and show ads tailored to their previous interactions (Wordstream). Offer complementary products or services to recent buyers, and exclude existing customers from acquisition campaigns to avoid wasted spend. Shopify reports that brands using first‑party data for retargeting achieved up to twice as many orders per dollar spent (Shopify.com).
8. Embrace Automation & AI
Smart Bidding algorithms adjust bids in real time based on the likelihood of conversion. Use Target ROAS or Maximize Conversions (or Maximize Conversion Value) to let Google optimize bids for profitable traffic, but be sure to supply the algorithms with sufficient conversion data and negative keywords for context.
Custom creative tools and audience builders further refine targeting by leveraging aggregated customer data; some advertisers saw 52% lower acquisition costs and a 5.6x ROAS after adopting these tips (Shopify.com).
Best Practices & Strategies
- Structure campaigns logically. Organize your account by products, regions or funnel stages. While there is no “best” number of ad groups per campaign, tightly themed ad groups will perform better.
- Spy on competitors. Use tools like SimilarWeb or Semrush to see where competitors advertise. Find which keywords they use and how they design their ads. Take inspiration but differentiate your messaging.
- Use extensions. Sitelink, price and promotion extensions improve ad real estate and click‑through rates. Don’t ignore phone or location extensions if local conversions matter.
- Leverage negative keywords. Regularly add negative keyword terms that waste budget (e.g., “free,” “cheap”) to keep your targeting focused.
- Prioritize high‑intent keywords. Exact match types deliver precision but lower volume; broad match expands reach but may invite irrelevant clicks. A combination, with tighter bidding on proven winners, maximizes scale and efficiency.
- Test creatives and landing pages. Run A/B tests for headlines, images and CTAs. Continuously optimize landing pages to reduce bounce rates and increase conversions (Shopify.com).
- Monitor and adjust regularly. Analyze campaign data weekly. Pause low‑performing keywords, shift budget to high‑ROAS segments, and refine your bidding strategies.
Tools & Resources
- Google Ads Conversion Tracking & Analytics – for measuring ROAS and importing revenue data.
- Google Ads Smart Bidding (Target ROAS, Maximize Conversions, Maximize Conversion Value) – uses machine learning to optimize bids based on conversion likelihood.
- Audience Tools – Shopify Audiences and similar services help build targeted lists, yielding higher returns and lower acquisition costs (Shopify.com).
- Competitive Analysis Platforms – Semrush, SimilarWeb, Pathmatics and SpyFu tools help discover keywords and estimate competitor spend.
- Creative Testing Platforms – Ad tools like Optmyzr, AdEspresso or Google’s own responsive ads allow for multivariate creative testing.
Common Mistakes to Avoid
- Ignoring breakeven ROAS. Without knowing your minimum profitable return, you may scale campaigns that are actually losing money.
- Not tracking conversions or revenue. Without conversion values, you can’t optimize for profitability. Always implement robust conversion tracking.
- Using generic messaging. One‑size‑fits‑all ads rarely convert. Personalize creatives and offers by segment.
- Neglecting negative keywords. These keep irrelevant clicks (and wasted spend) in check.
- Overlooking landing pages. Poor page experience lowers quality scores and increases CPCs. Always align landing content with ad promises.
- Failing to test. Treat campaigns as ongoing experiments; data‑driven testing reveals what resonates.
The Brand Amp Case Study: KT Tape
Sports and Fitness brand KT Tape leveraged first‑party audience data through Shopify and Klaviyo to optimize its digital marketing campaigns. By refining targeting, creative and using customized lookalike audiences, the brand gained over 10% more brand searches, achieved a 63% higher ROAS, and cut CPC by 65%. This demonstrates the power of combining audience segmentation with smart bidding and creative testing.
Conclusion & Key Takeaways
Google Ads remains a powerful channel for businesses: it enjoys wide adoption, high click‑through rates and a median ROAS that outperforms many competing platforms. But maximizing returns is not automatic.
- Define your breakeven ROAS based on profit margins and set realistic targets using industry benchmarks (Shopify.com).
- Segment your audience and tailor ads accordingly; repeat buyers convert 50–70% better than cold prospects.
- Optimize keywords and bids with negative keywords and smart bidding strategies.
- Refine creatives and landing pages to match user intent and maintain quality scores.
- Measure, retarget and automate to sustain and maximize efficiency and growth.
By integrating these strategies and leveraging first‑party data and automation, you can not only increase ROAS in your Google Ads account but build a more resilient, customer‑centric marketing engine.
Ready to start? Our integrated digital marketing services can valuate your current campaigns against these principles and iterate. Then get ready to watch your returns climb!
Frequently Asked Questions
1. What is a good ROAS for Google Ads?
A strong ROAS varies by industry, but many advertisers target 4:1 or higher, meaning $4 in revenue for every $1 spent. Profit margins, product type, and customer lifetime value ultimately define what’s “good” for your business.
2. How do you calculate ROAS in Google Ads?
The formula is simple: ROAS = Revenue ÷ Ad Spend. For example, if you spend $5,000 and earn $20,000 in sales, your ROAS is 4:1. You can also use Google’s built-in Target ROAS bid strategy to automate optimization toward your goal.
3. Why is ROAS important for advertisers?
ROAS shows how efficiently your ad budget drives revenue. Tracking it helps marketers understand which campaigns are profitable, justify spend increases, and identify areas where ads may be wasting budget.
4. What’s the difference between ROAS and ROI?
ROAS measures the return directly from ad spend, while ROI accounts for all costs, such as production, labor, and overhead. ROAS focuses on advertising efficiency; ROI measures overall business profitability.
5. How can I improve my ROAS in Google Ads?
To increase ROAS, focus on better audience targeting, negative keywords, high-intent search terms, optimized ad copy, and landing page quality. Regular testing, conversion tracking, and smart bidding also make a big difference.
6. How often should I check my ROAS?
Review ROAS weekly or monthly depending on campaign size and spend. Consistent monitoring allows you to respond quickly to performance changes and reallocate budget toward higher-return segments.
