Google Ads ROI Explained: Making Sense of Your Ad Dollars and Cents

When you’re investing in Google Ads for your coworking space, the thing that matters most is your return on investment.

What are you getting back in exchange for the dollars and cents you’re putting in, and how does that benefit your business?

While it might be simple—you invest X budget, and in return, you get Y new members—there are a few other variables in the equation. 

Here’s how to make sense of your Google Ads ROI.

How Can You Measure the ROI of Your Google Ads Tracks?

At a fundamental level, the return on investment of a typical Google Ads campaign would be a measure of…

ROI = (Sales Growth – Advertising Cost) / Advertising Cost

But here’s where it gets tricky: coworking spaces don’t always operate Google Ads campaigns in a typical way.

Why?

Because the coworking sales cycle is incredibly varied, depending on the individual product you’re selling.

For private offices, the sales cycle can be quite lengthy. And on the other hand, the sales cycle for meeting rooms can be almost immediate. 

It all comes down to the level of time and financial commitment involved for the buyer.

Here’s an example…

If your sales cycle for a private office is four months, it would take four months for you to see the return on investment from a lead you acquired on the first day of your campaign.

So, while it might feel like you paid for a four-month ad campaign to secure that one lead, the reality is that you paid for one day of a Google Ads campaign to secure that lead—but it took them four months to convert into a member.

The Simplest Way to Calculate Google Ads ROI

Rather than looking at how quickly your Google Ads campaign generates conversions, it’s more effective to gauge the success of your campaigns based on two factors:

  • Cost per lead
  • Revenue per lead

If you’re paying a reasonable amount for each lead, that’s indicative of a successful campaign. And if you’re generating a reasonable profit from each lead, on average, that’s also a win.

The key is to look at these factors per service

For instance, if you bundle the data from private office, coworking membership, and meeting room sales, the waters become muddied, and it’s harder to get a clear picture of your success for each.

That’s why, at Spacefully, we run individual campaigns (Tracks, as we call them) per service rather than general campaigns for your coworking space.

In doing so, we’re able to provide you with a clear picture of your success based on the sales cycle for each service.

Multi-Location Tip:

Measuring ROI starts with proper attribution of your ad dollars and revenue.  Having multiple locations can get tricky, but with the proper setup, you can see the data you need to make an informed decision to maximize your ROI.

Book a free 15-minute consultation.

The Lifetime Value Equation

Another important thing for coworking spaces to consider when it comes to Google Ads campaigns is the lifetime value of a member.

Why is this important?

Relooking at our ROI formula below, one component is Sales Growth.

ROI = (Sales Growth – Advertising Cost) / Advertising Cost

Here’s an example…

If you look at a traditional eCommerce website that simply sells a product, the ROI of a Google Ads campaign is easy to calculate because there’s a transaction at the end of the buyer’s journey.

In that case, Google Ads is like a vending machine…

You put in one dollar, and it gives you back $1.50. You subtract your cost of running the ad, and your cost of goods sold, and you immediately see your profit in the bank. 

But it’s a bit more complex for coworking spaces because you also need to consider the lifetime value of a member to understand your true ROI.

If your lead books a one-hour meeting room, that’s a one-off ROI. But if your lead converts to a private office for $2,000 per month, that ROI continues to grow over time as the member stays longer. 

So, by understanding the lifetime value of your members for each service, you can immediately determine just how impactful your Google Ads spend was for that lead…

Member Lifetime Value = (Member Value x Average Member Lifespan)

If you pay $100 for a private office lead and the lifetime value of a private office member is $24,000, you can immediately see your return on investment from that lead. 

And in that case, you just have to make sure that what you’re paying per lead and conversion makes financial sense to you.

Pro Tip:

Lifetime value can come from other sources.  Consider your existing members, and how else they’ve contributed to lifetime value.

Monetary ways include up-sells, cross-sells, paid events, and possibly even price increases. 

Non-monetary ways include nurturing a community, showing up at events, welcoming new members and more.
Discover how we help combine retention with lead generation to help get your space full, and keep it full.  Book a free 15-minute consultation.

Determining Your Comfort Level with Google Ads ROI

Your ultimate ROI can be subjective—it all depends on your level of comfort with your spend versus what you ultimately get back.

Some people will be more comfortable with a higher cost per acquisition than others, and it’s also important to remember that those costs will vary based on your location, demographics, and audience

Speaking with a specialist is a great way to get gauge what’s realistic based on these variables and to set your goals.

Things You Can Do to Boost Your ROI 

At the end of the day, Google Ads will bring you leads. But there are also a number of factors on your end that will determine whether those leads convert—or bounce away from your page.

Landing Pages

Utilizing custom landing pages for your campaigns can help increase your conversion rate by focusing your lead’s experience once they click on your ad. 

Optimizations

Examining the performance of your campaign and making optimizations on the fly can help you ensure that your ads are performing as well as possible.

Your Offer

Ultimately, your space, products, and value proposition will be the deciding factors that determine whether your leads become members. 

So, ensuring that what you’re offering is aligned with what your market wants is a critical component. This is also a great way to increase your members’ lifetime value, in turn supercharging your ROI in the long run. Improving profitability by cutting costs, reducing churn or adding to your prices is also a good way to increase your ROI. 

It’s also wise to remember that Google Ads is an auction-based system. So, if it’s working for your competitors but not for you, it’s wise to look at what they’re doing and tweaking your offering accordingly. 

Google Ads is one of the most effective ways to fill your coworking space. But calculating your return on investment requires you to understand all of the factors in the equation. 

If you’re feeling unsure about how to measure the success of your campaign, speaking with a specialist can be incredibly helpful. And that’s where Spacefully can help. 

Learn how we can supercharge your lead generation by signing up for our Google Ads Blueprint today.