The one number that makes Google Ads make sense

If you take one thing from this blog, take this: you cannot tell whether an ad is expensive until you know what a customer is worth to you. Everything else — cost per click, click-through rate, quality score — is noise arranged around that single question.

Why $8 a click can be cheap

A plumber pays $8 for a click and winces. But if one in ten of those clicks becomes an enquiry, and one in three enquiries becomes a job worth $400, then ten clicks cost $80 and produce roughly $133 of work. That click was cheap.

A different business pays $2 a click and is quietly losing money, because their enquiries rarely close and each customer is worth $60. Same platform, same interface, opposite conclusion. The click price told neither of them anything.

The two numbers you need

First: what a customer is worth. Not the first invoice — the whole relationship. A dentist's new patient is worth several years of check-ups. A roofer's customer might be one job and a referral. Be honest rather than optimistic.

Second: how many enquiries actually become customers. Most owners guess high. If you've never counted, count for a month — it is usually the more surprising of the two numbers.

What it gives you

Multiply them and you get your break-even: the most you can pay for an enquiry before you start losing money. If a customer is worth $400 and one in four enquiries closes, you can pay up to $100 per enquiry and still break even.

Now every decision is answerable. A keyword bringing enquiries at $60 is making money. One bringing them at $140 is not, however good its click-through rate looks. You no longer need anyone's opinion about it.

The trap

Most reporting never does this multiplication. It reports cost per conversion and stops — leaving you to guess whether $90 is good. It isn't good or bad. It's good at $400 a customer and terrible at $150. Any report that doesn't know your customer value cannot tell you whether you're winning.