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Spending more on Google Ads – anyone can do that. Spending more whilst remaining profitable? Welcome to the real game. These days, a high-performing SEA agency must answer a very simple question: how can it generate more value from every euro invested? And for that, the key metric remains ROAS – Return on Ad Spend. So, how do you choose an SEA agency capable of genuinely improving your ROAS? And, above all, how do you distinguish an agency that drives your growth from one that merely ‘manages the account’ on autopilot?
Key takeaways:
In short, choosing a digital marketing agency is not just about delegating the management of your Google Ads campaigns. It’s about finding a partner capable of understanding your business challenges, leveraging your data and managing your investments to maximise the value generated in the long term.
ROAS is your revenue divided by your advertising budget. The formula fits on a Post-it note: ROAS = revenue generated / advertising spend.
You spend €10,000 on Google Ads and the campaigns generate €50,000 in turnover? Your ROAS is 5, or 500 per cent. So every euro invested generates €5 in turnover. Simple. Or so it seems.
As part of a lead generation strategy, calculating ROAS requires a complementary approach. A conversion recorded in Google Ads (a form submission, a phone call or a quote request) does not necessarily represent actual turnover. It is therefore essential to reconcile advertising data with sales results – particularly using a CRM system – in order to measure the value of the leads generated and the turnover actually secured.
To determine whether a campaign is actually profitable, you need to work out its advertising break-even point, also known as break-even ROAS. This depends mainly on the gross margin generated from sales.
The formula is simple: minimum ROAS = 1 / gross margin.
For example, with a gross margin of 40 per cent, the ROAS must be at least 2.5 to cover advertising expenditure, excluding other costs. In other words, every euro invested must generate €2.50 in turnover to break even.
This threshold enables the definition of a target ROAS that is consistent with the company’s business objectives and cost structure.
| Campaign | Budget | Revenue generated | ROAS |
| Campaign A | €10,000 | €70,000 | 7 |
| Campaign B | €50,000 | €250,000 | 5 |
Campaign A has a better ROAS. But Campaign B generates an additional €180,000 in turnover. Which one has really won? It depends on your margin, your ability to scale, and your objectives. Proof positive that a good SEA agency doesn’t simply chase the most impressive ROAS.
ROAS and ROI are often confused, but they do not measure the same thing. ROAS assesses the revenue generated in relation to advertising expenditure, whilst ROI measures the overall profitability of an investment by taking into account the associated costs.
A positive ROAS therefore does not necessarily guarantee a positive ROI. A campaign may generate a significant amount of turnover whilst still operating at a loss if margins are too low or if associated costs are high. Both indicators must be analysed together to assess the true performance of SEA investments.
Google Ads already automates a whole host of things: bidding, audiences, placements, ad creatives and signals. So why pay an agency if Google’s AI already manages everything? Because there’s a world of difference between letting the algorithm optimise a random figure and giving it the right information and the right business objectives to hit the mark 🎯
An SEA agency has to juggle a whole host of different aspects at the same time: tracking, campaign structure, bidding strategy, product feeds, audiences, first-party data, creative assets, attribution, margin, customer value, seasonality, competitive pressure, and so on.
Realising that two products do not have the same profit margin is the ABCs. Translating that into your bidding strategy – with rules that prioritise the most profitable product rather than the best-selling one – that’s where the difference lies!
You can’t improve ROAS with shoddy data. A reputable agency will first check the conversions being tracked, their value, any duplicates that have slipped through, consent, and CRM feedback relating to lead generation.
Knowing which products deserve a larger budget, which customers are worth their weight in gold in the long run, and which segments are dragging down margins without ever bringing in any revenue. This is even more crucial in e-commerce, where not all products have the same margin or the same stock levels.
This approach can, in particular, involve making use of CRM data. By linking sales data to Google Ads campaigns, an agency can distinguish between prospects who actually generate revenue and those who merely make initial contact. In particular, this data enables agencies to feed qualified conversions back into Google Ads, refine bidding strategies and prioritise audiences with the greatest commercial potential.
A good agency focuses instead on marginal ROAS and LTV to target the real area of return, not just the most impressive figure to show in a meeting. Unlike overall ROAS, which measures the performance of all investments combined, marginal ROAS assesses the additional revenue generated by an extra budget. It therefore helps determine whether increasing advertising spend remains worthwhile, even when overall ROAS is falling.
Performance Max and Smart Bidding rely on machine learning. A good SEA agency feeds the algorithm with signals (margin, stock levels, seasonality) that the machine simply cannot detect on its own.
💡 Advice from our experts:
Set a target ROAS that is consistent with your profitability
👉 Don’t set a ROAS target without taking into account your margins, acquisition costs and business objectives. The right metric should reflect the economic reality of your business.
Ensure your tracking is reliable before optimising your campaigns
👉 Check your conversion setup, ensure conversion values are being reported correctly, and make sure there are no duplicates. Reliable data is essential for properly guiding bidding algorithms and measuring actual performance.
Integrate your business data into your SEA strategy
👉 Leverage your CRM data, margins, stock levels and customer lifetime value (LTV) to refine your decision-making. Not all products and customers offer the same potential for profitability.
Don’t sacrifice growth for the sake of a high ROAS
👉 Avoid cutting your spend solely to improve your ratio. Instead, analyse marginal ROAS to identify growth opportunities and determine how far you can increase your budgets without unduly compromising profitability.
Maintain control over Google Ads automation
👉 Smart Bidding and Performance Max can improve the efficiency of your campaigns, provided you feed them the right signals. Set appropriate objectives and regularly monitor the quality of the traffic and conversions generated.
The key point: maximising your ROAS isn’t about chasing the highest possible ratio, but about finding the right balance between profitability and growth. A successful SEA agency must rely on reliable data, a sound understanding of your business challenges and continuous management of your investment.
Ad’s up and ROAS management
As a Google Ads agency, Ad’s up supports businesses that wish to go beyond the mere day-to-day management of their campaigns. The agency combines Google’s AI technologies with its own management methods to analyse data and steer optimisations towards concrete business objectives: improving the return on advertising investment whilst supporting business growth.
One point to bear in mind, including for Ad’s up: a published client case study, however robust it may be, remains specific to a given context (sector, budget, account maturity, seasonality) and never constitutes a universal promise of performance. The right way to interpret it is not to see it as a guarantee, but as evidence of a methodology applied in a real-world context, which you should compare with your own situation during meetings.
Managing ROAS also involves keeping abreast of developments in Google Ads. The move to AI Max marks a new stage in the automation of Search campaigns, offering expanded capabilities in terms of targeting, ad creation and landing page selection. This development warrants careful planning and review to ensure that automation continues to support your profitability and growth objectives.
The best ROAS isn’t necessarily always the highest. A good SEA agency helps you find the level of investment that truly creates value. This requires data, technology, strategy and a genuine understanding of your business. In short, everything that sets a mere account manager apart from a true growth partner 🚀
Would you like to know whether your current ROAS truly reflects your profitability? The Ad’s up team can review it with you.
The minimum ROAS depends mainly on the gross margin and the costs associated with each sale. For a business with a gross margin of 40 per cent, the ROAS must be at least 2.5 to cover advertising expenditure, excluding other costs. This threshold enables you to set a profitability target suited to your business.
Actual ROAS corresponds to the revenue actually generated in relation to advertising expenditure incurred. Target ROAS represents the objective set by the advertiser to guide bidding strategies and the management of Google Ads campaigns. It must be determined based on the company’s margins and commercial objectives.
Opt for an agency capable of combining Google Ads expertise, tracking, data analysis and an understanding of your profitability. The aim should be to improve the value generated, not just a single KPI.
There is no universal ROAS. An ROAS of 3 may be excellent for a high-margin business, but insufficient for another. It is calculated based on each company’s specific margins, costs and growth objectives.
A reputable agency can set targets, optimise campaigns and develop scenarios, but it should never arbitrarily guarantee performance that is independent of the market, the product or the competition.
Because the most profitable audiences are generally reached first. As investment increases, the marginal cost of acquisition tends to rise.
For large budgets or complex challenges, in-depth expertise in Google Ads, tracking and data becomes particularly crucial.
