New Jersey Tech, Business, & Creative Resources
A 30-Minute Profit Check for Your Google Ads Account
Your monthly ad report looks good. Cost per lead is down, conversions are up, and the return on ad spend (ROAS) is above target. But the phones aren’t busier, the schedule isn’t fuller, and the bank balance hasn’t moved.
PPC consultant Sarah Stemen explained one reason this happens in a recent Search Engine Journal article: Google’s Smart Bidding is built to hit the targets you give it, not to grow your business. This guide builds on her argument and turns it into a check you can run yourself, with the math and examples for a local business.
You’ll need five numbers: your last 90 days of ad spend, the revenue Google reports, your margin before ad costs, your lead-to-customer close rate, and your average sale. Your bookkeeper or sales log can supply most of them.
Step 1: Find your break-even ROAS
ROAS is revenue divided by ad spend. It says nothing about what it cost you to deliver the product or service. To know whether a ROAS is good, divide 1 by your margin before ad costs:
Break-even ROAS = 1 ÷ margin
| Margin before ads | Break-even ROAS |
|---|---|
| 20% | 5.0x |
| 30% | 3.3x |
| 40% | 2.5x |
| 50% | 2.0x |
| 60% | 1.7x |
A business with a 20% margin that proudly reports a 4.0x ROAS is losing money on every sale before it pays a single overhead bill. Spend $10,000, earn $40,000, and the 20% margin leaves $8,000 to cover that $10,000 of ads. A business with a 60% margin at the same 4.0x keeps $14,000.
Your target should sit above break-even, with room for overhead and profit. If your ROAS target was set a few years ago, check it against today’s costs. Supplier prices, labor, and fuel have all moved.
Step 2: Separate the customers who found you from the ones who already knew you
Open your search terms report and sort the terms that include your business name from the ones that don’t. Branded searches and remarketing usually show the best ROAS in the account, because the people clicking already know you.
That doesn’t make branded campaigns worthless. They can protect your name from competitors who bid on it. But their ROAS flatters the account, and Smart Bidding can lean toward those easy wins and make the overall numbers look better without adding new customers.
Look at your new-customer numbers next to your branded numbers. If new customers are flat while branded conversions climb, the growth is mostly credit for demand you already had.
Step 3: Count what happens after the form fill
For a local service business, a “conversion” is often a form fill or a phone call. Neither one is a job.
Here’s an illustrative example. An HVAC contractor spends $2,400 a month and Google reports 40 leads, a $60 cost per lead. Twelve of those leads book a job.
| Measure | Math | Result |
|---|---|---|
| Cost per lead | $2,400 ÷ 40 | $60 |
| Cost per booked job (12 jobs) | $2,400 ÷ 12 | $200 |
| Cost per booked job after faster follow-up (16 jobs) | $2,400 ÷ 16 | $150 |
The dashboard shows $60. The business is actually paying $200 for every customer. Now suppose the office starts returning calls within the hour, and booked jobs go from 12 to 16. The cost per job drops to $150. That’s 25% cheaper, and nothing changed in Google Ads. If your sales or phone follow-up is slow, fixing it is often a better first move than adjusting bids.
To close the loop, track phone calls, record which leads became jobs, and import those outcomes into Google Ads as offline conversions where you can. Then Smart Bidding learns from sales, not from form fills.
Step 4: Check whether your target is holding you back
A tight efficiency target can cap your growth. Suppose a business with a 40% margin before ads has two options:
| Option | Ad spend | Revenue | ROAS | Left after margin and ads |
|---|---|---|---|---|
| A | $5,000 | $30,000 | 6.0x | $7,000 |
| B | $15,000 | $60,000 | 4.0x | $9,000 |
Option B looks worse on ROAS and earns more money. Those numbers are illustrative and no result is guaranteed, but they show why chasing the highest ROAS can leave profit on the table. Test lowering the target gradually and watch total profit, not just the ratio.
Step 5: Not every customer is worth the same
An emergency repair customer who pays once and a customer who signs a yearly service plan and refers a neighbor both show up as one conversion. If Google only sees the first sale, it can’t tell which one you’d rather have.
Where you can, assign different values to different kinds of conversions, and feed back repeat business, plan signups, or lifetime value. Even a rough estimate gives the system a better signal than treating every lead as equal.
Step 6: Look outside the ad account
Ads can bring in good leads and the business can still lose them. A form fill on Monday gets a callback on Thursday. An ad promotes a service you’re booked solid on. A new customer cancels after a rough first week.
Google Ads can’t see most of this, so the account may keep asking for more budget while the real problem sits in follow-up, scheduling, or service. Ask finance, sales, operations, and support what they’re seeing before you raise the budget.
What to ask your agency or freelancer
If someone else manages your ads, these six questions are fair to ask in your next report meeting:
- What is our break-even ROAS, and where are we against it?
- How much of our conversions come from branded searches and remarketing?
- What does one booked job or paying customer cost us, not one lead?
- Are we importing real sales outcomes into Google Ads?
- Have we tested a lower target to see if profit goes up?
- What’s happening to leads after the click?
A good partner will answer these without defensiveness. If the answers are vague, that tells you something too.
The bottom line
Smart Bidding works well when it’s given accurate data and a target that reflects your real margins. It can’t decide on its own what success means for your business. That part is still yours.
This article builds on Sarah Stemen’s “Your Google Ads Account Is Hitting Its Targets, So Why Isn’t The Business Growing?” for Search Engine Journal.
