Hiring an agency to run Google Ads for your ecommerce store can be a massive time-saver, but it does come with one big challenge:
How do you know if they’re really moving the needle for your business?
If you're not already a Google Ads expert, it’s easy to get overwhelmed by the sheer number of metrics to track and consider when assessing agency performance.
This very same question came up in an ecommerce community that I write for, and here’s what I advised the store owner.
Revenue or Profit: What's Your Focus?
The first thing you need to do is decide what you want to prioritise — revenue or profit. This is crucial because it will shape how you assess the agency’s performance.
Here’s the thing:
You can grow both revenue and profit, but it’s important to have one clear goal at a time for at least a few months. Changing goals too frequently just leads to confusion for both you and the agency.
Once you've made up your mind, you can break it down like this:
If Revenue is Your Priority:
Measure Revenue Growth and ROAS (Return on Ad Spend): Set clear goals for both. For example, you might aim for 50% year-on-year revenue growth while maintaining a minimum ROAS of 400%.
Make Goal Setting a Collaborative Process: You provide your targets, and the agency can then give feedback. They might adjust the goal if they feel it’s unrealistic, and you should listen carefully to their reasoning.
If Profit is Your Priority:
Calculate Gross Profit After Ad Spend (GPAAS): This metric measures your profit after accounting for ad costs. You’ll need to define your profit equation upfront and stick with it. Don’t change it month-to-month; keep things simple and consistent.
Incorporate GPAAS into Reporting: Ask your agency to add a GPAAS column to their reports so you can track this over time. As with revenue, set a goal, review their feedback, and once you’re both happy with the target, lock it in for at least three months.
Incrementality and Tracking the Right Metrics
So, now you have your goals.
But how do you track progress and know if the agency is actually driving incremental growth? It’s easy to get bogged down by the wrong metrics, so focus on what's important.
Use Google In-Platform Data
When tracking performance, the simplicity and speed of using Google Ads' in-platform numbers outweigh the need for total accuracy. While Google’s numbers might not always reflect the complete truth, they generally correlate closely with real results. The key is consistency. If you know Google tends to over-report revenue by 10%, just factor that into your goals.
In other words, don’t chase perfection. By using the data available within the Google Ads platform, your agency can optimise campaigns more efficiently, making adjustments faster and improving your results.
Consider Third-Party Attribution—If You Must
If you find that Google’s reporting just isn’t accurate enough for your business, you can explore using a third-party attribution tool. However, bear in mind that there’s no one-size-fits-all solution here. The tool you choose depends on your product, audience, and the other platforms you’re using for marketing.
Regardless of whether you stick with Google’s numbers or use a third-party tool, the most important thing is clarity. Make sure you and your agency agree on the approach upfront, and don’t change it later. Keep things simple and consistent.
Setting Realistic Goals
Whatever your priority—revenue or profit—setting a realistic goal is vital. Your target should be ambitious but achievable. Collaborate with your agency to ensure they understand your business’s limitations and possibilities.
Review Periods: After 3, 6, or 12 months (depending on your preference), you should review the results and set new targets. This process of setting and reviewing goals helps you stay on track without micromanaging the agency’s work.
Avoid Changing Metrics: Once you’ve locked in your target and the method of measurement, don’t change it. Consistency leads to more reliable insights over time. Changing things frequently will only confuse the agency and make it harder to determine what's working.
Keep Things Simple and Consistent
In short, when you’re measuring the success of your Google Ads agency, the most important factors are simplicity and consistency.
Decide whether your priority is revenue or profit, and track performance using GPAAS or Google’s in-platform data.
Set clear goals, make sure your agency understands them, and resist the urge to constantly change things. Over time, this approach will give you a clear view of whether your agency is worth their fee.
I hope this helps you make a smart decision when working with your Google Ads agency!