Is Google Ads Right for Your Business?

By: Jyll Saskin Gales, Google Ads Coach

Is Google Ads the right move for your business? This is a question many entrepreneurs and marketers grapple with, and it’s a valid one. Investing in paid advertising can be a significant commitment, and you want to ensure it’s going to yield a positive return. So, how do you determine if Google Ads will be a powerful engine for your growth, or simply a drain on your resources?

Many businesses jump into Google Ads without a clear understanding of whether they're truly ready. This often leads to wasted ad spend and a feeling that "ads don't work." The truth is, ads can work incredibly well, but only when certain foundational elements are in place.

In this post, we’ll dive into:

• Why building an organic foundation before running ads is crucial.

• The essential business elements you need to have dialed in for ad success.

• A simple, actionable "Rule of Two" to help you decide if you're ready for Google Ads.

• Understanding the key metrics: conversion rate, average order value, and revenue per session.

Build Your Foundation First: Why Ads Should Follow Organic

Think of your business as a rocket. Before you light the expensive fuel (your ad budget), you need to make sure the rocket itself is well-built, stable, and pointed in the right direction. That "well-built rocket" is your organic presence.

What does "organic" mean in this context? It refers to traffic and engagement you acquire without paying for it directly. This could be through:

• Search Engine Optimization (SEO): Getting your website to rank higher in Google search results.

• Social Media Marketing: Building a community and engaging with your audience on platforms like Instagram, Facebook, or LinkedIn.

• Content Marketing: Creating valuable blog posts, videos, or podcasts that attract and inform your target audience.

• Public Relations (PR): Earning media mentions and publicity for your business.

The goal of this organic phase is to validate your core business thesis. You need to understand:

• Your Offer: Is your product or service something people actually want and are willing to pay for?

• Your Website: Is it user-friendly, clear, and does it effectively guide visitors towards a desired action?

• Your Messaging: Are you communicating the value of your offer in a way that resonates with your ideal customer?

• Your Audience: Who are the right people to target? What are their needs, pain points, and how do they speak about them?

If you haven't thoroughly explored and refined these elements through organic efforts, then using ads to figure them out will likely be a very expensive experiment. It's like trying to learn how to drive a car by immediately entering a high-speed race – you're more likely to crash and burn.

Once you've consistently driven traffic, observed how people interact with your website, refined your messaging based on what resonates, and identified your ideal customer, then Google Ads can act as an accelerant. It's fuel on an already burning fire, making it bigger and brighter.

The "Rule of Two": A Simple Litmus Test for Ad Readiness

For those who prefer a more concrete guideline, here’s a simple rule to help you determine if you're prepared to invest in Google Ads:

If your conversion rate multiplied by your average order value does not equal at least $2, you are probably not ready to run ads.

Let's break down why this "Rule of Two" is so important and how to calculate it.

Understanding the Key Metrics

1. Conversion Rate: This is the percentage of people who visit your website and complete a desired action (a "conversion"). This action could be making a purchase, filling out a form, signing up for a newsletter, or any other goal you've set.

   • Example: If 100 people visit your website and 2 of them make a purchase, your conversion rate is 2%.

2. Average Order Value (AOV): This is the average amount of money a customer spends when they make a purchase from your business.

   • Example: If your customers spend an average of $100 per purchase, your AOV is $100.

3. Revenue Per Session: This is the average amount of revenue you generate each time someone visits your website. It's calculated by multiplying your conversion rate by your average order value.

   • Example: Using our previous examples: 2% (Conversion Rate) * $100 (AOV) = $2 Revenue Per Session.

This means that, on average, every time someone lands on your website, you're generating $2 in revenue.

Why the $2 Threshold?

The reason for the $2 minimum for your revenue per session is practical. In today's digital advertising environment, it's increasingly uncommon to find a Google Ads cost-per-click (CPC) below $2. Many industries see CPCs ranging from $5 to $10, or even higher.

If your revenue per session is less than your average cost per click, you're essentially losing money on every visit driven by ads. Even if you're breaking even, the goal of advertising is generally to generate a profit, not just cover costs.

Let's consider a few scenarios:

• Scenario 1: Low Conversion Rate, Low AOV. If your conversion rate is 2% and your average order value is only $20, your revenue per session is $0.40 (2% * $20). In this case, if your Google Ads CPC is $2, you're losing $1.60 for every click. This is a clear sign that you need to optimize your offer, website, or messaging before investing in ads.

• Scenario 2: High AOV, Very Low Conversion Rate. Imagine you sell a high-ticket item with an average order value of $1,000, but your conversion rate is a mere 0.01%. Your revenue per session would be $0.10 (0.01% * $1,000). While the potential per sale is high, the extreme difficulty in converting visitors makes ads highly unprofitable. This indicates a problem with your website's ability to persuade visitors, or perhaps your audience isn't well-matched to your offer.

• Scenario 3: Meeting the Rule of Two. With a 2% conversion rate and a $100 average order value, your $2 revenue per session gives you a fighting chance. While you'll still need to monitor your ad spend carefully, this baseline suggests you have a viable foundation to build upon.

Who Should and Shouldn't Use Google Ads?

You should consider Google Ads if:

• You have a clear offer, a functional and converting website, refined messaging, and a well-defined target audience.

• Your conversion rate times your average order value is at least $2 (and ideally higher!).

• You have consistently proven demand for your product or service through organic channels.

• You are looking to scale your existing success and pour fuel on a proven fire.

You shouldn't use Google Ads if:

• You are still figuring out what your product or service is, who it's for, or how to talk about it.

• Your website is not converting visitors into customers at a reasonable rate.

• Your revenue per session is significantly below $2.

• You haven't yet proven the viability of your business organically. In this scenario, your marketing budget is better spent on improving your core business elements and organic marketing strategies.

In conclusion, Google Ads can be an incredibly powerful tool for business growth, but it's not a magic bullet. By focusing on building a strong organic foundation and ensuring your core business metrics are healthy, you'll be much better positioned to see a significant return on your ad investment. Don't rush into paid ads; take the time to build your rocket before you launch.