One of the questions we’re asked most often is:
“Should we invest in Google Ads?”
It’s a fair question. Google Ads can be one of the fastest ways to generate enquiries and grow a business. We’ve seen it become a highly profitable acquisition channel for many businesses.
But over the years we’ve noticed something. Businesses often jump straight to questions about budgets, keywords and agencies before asking what is arguably the more important question:
Will Google Ads actually make commercial sense for our business?
They’re not the same question.
We’ve worked with businesses where Google Ads became one of their best investments. We’ve also spoken with businesses where, after looking at the numbers, it was unlikely to generate an acceptable return regardless of who managed the campaign.
The difference usually has very little to do with Google Ads itself.
Start with the economics, not the advertising
When people think about Google Ads, they naturally think about marketing.
We tend to think about it as an investment decision. Like any investment, the question isn’t simply whether it works. The question is whether it will generate an acceptable return.
A simple way to think about it is this:
Advertising → Leads → Customers → Revenue → Profit
Most conversations about Google Ads focus on the first step, generating leads. That’s important, but it’s only one part of the picture.
The commercial outcome is determined by everything that happens afterwards. How many enquiries become paying customers? What is each customer worth? How much profit do you make? Do customers come back?
Those are the questions that ultimately determine whether Google Ads becomes a growth engine or an expensive experiment.
Before recommending Google Ads, we work through a few commercial questions
You don’t need a complex financial model to get a good indication of whether Google Ads is likely to stack up. In most cases, understanding a handful of key numbers will tell you a lot.
What is a new customer worth?
This starts with your average customer value. For some businesses that’s straightforward because every sale is similar. For others it means looking at the average value across many customers.
The important point is understanding what a typical new customer contributes to the business.
What margin do you make?
Revenue and profit are two very different things.
A business with healthy margins has much more flexibility to invest in acquiring new customers than one operating on very thin margins.
It’s surprising how often this gets overlooked when marketing budgets are being discussed.
How many enquiries become customers?
Every business has a conversion rate, whether it’s measured or not.
If one in every two enquiries becomes a customer, you’ll need two leads to generate each new sale.
If it’s one in five, you’ll need five.
Improving this number often has a greater impact on profitability than reducing your advertising costs.
Do customers come back?
For some businesses, the first sale is just the beginning.
Medical clinics, accountants, financial advisers, trades with ongoing maintenance work and many professional service businesses generate significant value from repeat customers.
Understanding customer lifetime value often changes the economics of Google Ads dramatically.
What is a realistic cost per lead?
Only once we understand the business do we start looking at likely advertising costs.
Every industry is different. Some local service businesses can generate high-quality enquiries very efficiently. Others compete in markets where every click comes at a premium.
The important thing isn’t finding the cheapest leads. It’s understanding whether those leads can be acquired profitably.
A simple example
Let’s imagine a business generates around $200 in revenue from an average customer.
Around half of all enquiries become paying customers, so the business needs two leads to generate one sale.
If they’re comfortable spending $80 to acquire a customer, they can afford to pay around $40 per lead.
If Google Ads is likely to generate enquiries below that figure, the commercial case starts to look attractive.
If similar enquiries are likely to cost $90 per lead, the conversation changes.
That doesn’t necessarily mean Google Ads is the wrong choice.
It simply means there may be better opportunities to improve the economics before investing heavily in advertising.
Sometimes the biggest opportunity isn’t Google Ads
One of the reasons we like to start with the commercial side of the discussion is that it often uncovers opportunities that have nothing to do with advertising.
We’ve worked with businesses where the biggest constraint wasn’t a lack of leads. It was a website that wasn’t converting visitors into enquiries.
In other cases it’s been a slow sales process, low customer retention, unclear pricing or simply targeting the wrong market.
Improving those areas can have a much bigger impact on growth than increasing the advertising budget.
So, should you invest in Google Ads?
In many cases, yes.
Google Ads remains one of the most effective ways for businesses to generate qualified enquiries from people actively looking for their products or services.
The point isn’t that Google Ads doesn’t work.The point is that it’s worth understanding the commercial case before deciding how much to invest.
Once you know what a customer is worth, what you can afford to spend acquiring one and how your business compares to likely advertising costs, decisions become much clearer.
Sometimes that analysis points towards Google Ads. Sometimes it suggests SEO is the better long-term investment. Sometimes it highlights opportunities to improve your website or sales process before spending more on advertising.
Either way, you’re making decisions based on evidence rather than assumptions.
And that’s usually where the best marketing decisions begin.
Thinking about Google Ads?
If you’re considering Google Ads but aren’t sure whether the numbers stack up, we’d be happy to help.
A short commercial review can often provide a clear picture of what’s likely to work, what needs attention first and whether Google Ads is the right investment for your business at this stage.
