Archive for June, 2012

ROI on Google AdWords: Do the Math

June 7, 2012

Small business owners of the world, unite! You are part of an apparently bottomless well of advertising dollars, and the big boys are out to take them from you. Today, in Misleading Advertising Sales…how Google would like you to calculate Return on Investment.

Here’s a look at part of the “lesson” from Google on how to calculate Return on Investment:

Google has left the cost of goods or services out of their calculation. It could be an honest mistake, but this is a multi-billion dollar business, so I doubt that there is anything in the AdWords world that hasn’t passed muster with several layers of management.

I tried to give them the semantic benefit of the doubt, but their wording seems very clear:

“The net profit for your business can then be calculated based on your company’s revenue from sales made via your AdWords advertising, minus the cost of your advertising.”

They could have easily said “gross margin” or “contribution,” but they went with “revenue.”

So Google seems to be deliberately misleading small businesses into calculating their ROI from AdWords campaigns incorrectly, making their AdWords investment seem much better than it really is.

If Groupon doesn’t get you, Google will.