Growing your business through Google Ads requires more than launching campaigns — it requires data-driven decision making. That’s where growth formulas come in.
In this article, we’ll break down the essential formulas that advertisers use to measure, optimize, and scale Google Ads performance. Whether you’re running lead generation, e-commerce, or branding campaigns, these formulas are the foundation of smart advertising.
✅ 1. CTR (Click-Through Rate)
CTR = (Clicks ÷ Impressions) × 100
What it means: The percentage of users who clicked on your ad after seeing it.
Why it matters: High CTR = relevant ads and strong engagement. Low CTR? Time to improve your headlines or targeting.
✅ 2. CPC (Cost Per Click)
CPC = Total Cost ÷ Total Clicks
What it means: The average amount you pay for each click on your ad.
Why it matters: Helps manage budget. Lower CPC allows more traffic for the same cost.
✅ 3. Conversion Rate (CVR)
Conversion Rate = (Conversions ÷ Clicks) × 100
What it means: How many users took action (purchase, sign-up) after clicking your ad.
Why it matters: Tells you how effective your landing page and funnel are.
✅ 4. Cost Per Conversion (CPA)
CPA = Total Cost ÷ Conversions
What it means: How much it costs to get one lead, sale, or signup.
Why it matters: The lower the CPA, the more efficient your campaign is.
✅ 5. Return on Ad Spend (ROAS)
ROAS = Revenue ÷ Ad Spend
Example: If you spend ₹5,000 and earn ₹20,000, your ROAS is 4x.
Why it matters: It shows whether your ad spend is profitable. Aim for a ROAS above 3–5x depending on your margins.
✅ 6. Impression Share
Impression Share = (Your Impressions ÷ Total Eligible Impressions) × 100
What it means: Shows how often your ads appear compared to how often they could have.
Why it matters: Low impression share may mean you’re losing visibility due to low bids or budget.
✅ 7. Quality Score Formula (Google’s Internal Metric)
Google doesn’t publish the full formula, but Quality Score is based on:
- CTR
- Ad Relevance
- Landing Page Experience
Why it matters: Higher quality scores = lower CPC and better ad positions.
✅ 8. Ad Rank Formula
Ad Rank = Bid × Quality Score
Why it matters: Determines your ad position. Even with a lower bid, a high Quality Score can win the top spot.
✅ 9. Profit from Ads
Profit = (Revenue – Ad Cost – Product Cost)
Why it matters: ROAS is great, but actual profit is what matters most to your bottom line.
📊 Example Scenario
Let’s say you spent ₹10,000 on a campaign:
- Clicks: 500
- Conversions: 50
- Revenue: ₹30,000
Now apply the formulas:
- CPC = ₹10,000 ÷ 500 = ₹20
- CVR = (50 ÷ 500) × 100 = 10%
- CPA = ₹10,000 ÷ 50 = ₹200
- ROAS = ₹30,000 ÷ ₹10,000 = 3.0x
👉 This campaign is profitable if your average product margin is strong.
✅ How to Use These Formulas to Grow
- 📈 Optimize high CTR ads to lower CPC and improve Quality Score
- 🧪 Test landing pages to improve conversion rate
- 🎯 Focus on profitable campaigns with high ROAS
- 💰 Lower CPA over time by improving targeting and creatives
- ⚙️ Monitor impression share to identify scaling opportunities
🚀 Final Thoughts
Knowing your Google Ads growth formulas gives you the power to scale campaigns confidently and reduce wasted ad spend. Mastering these numbers is the difference between running ads and running profitable ads.
