Of course, this 5 minutes formula is made to give you a quick look on the health of the account and a fast, general idea of the overall position of the account on a predetermined scale that comes along with it.
How to calculate it
The formula is called “The Lin - Rodnitzky ratio” and is calculated by dividing the CPA of all your search queries with the CPA of all search queries that have more than 1 conversion.
- Select a date range (enough to make the data representative for your account)
2. On the left menu in Google Ads, under “Keywords”, select “Search Terms”
3. Filter in the keywords with more than 1 conversion
4. Make sure you modify your columns and add Cost / conv.
5. Scrolling down to the bottom, you are now looking for the Cost / conv. values of “Total: Filtered search terms” and “Total: Account”
6. Divide “Total: Account” by “Total: Filtered search terms” and that is your Lin - Rodnitzky ratio
Using the search terms and not your keywords it is because your actual spend is on the terms that triggered your ads to appear and so are the conversions divided on.
The Lin - Rodnitzky scale
Now that you found out a number that means nothing for you, it is time to see where in the suggested,by the creators, interpretation you fall.
- 1.0-1.5: The account is conservative. There is very low wasted spend, but the account is likely missing out on a lot of incremental conversions, most of which are likely to still be highly profitable for the business.
- 1.5-2.0: The account is well-managed. There is a combination of consistent winners that always bring in sales and experimental queries that are being tested to identify growth opportunities.
- 2.0-2.5: The account is too aggressive. There are too many queries getting clicks that are not driving conversions. This is either due to excessive use of broad match, a lack of attention to the account, or a lack of rigorous analysis of metrics.
- 2.5+: The account is being mismanaged. Money is being wasted daily, and simple changes can save the business a lot of money.”
Keep in mind that the scale above is not divided by industries and for some accounts that have a lot of long tail keywords, the number can go higher, due to a large number of variations of the keyword and very small number of clicks.
Footnotes and disclaimers
This formula was created and tested against accounts on Google Ads in a previous version where you could filter the search terms with equal or greater than 1 conversion, this is no longer possible, you can now only filter with less or greater.
Above that, Data Driven attribution model is currently available, which divides the conversions amongst all the keywords that helped convert if chosen in the conversion setup.
As a general rule,if your account uses Data Driven, try to calculate the L-R ratio once by filtering search terms with more than 0 conversions and once with more than 1 conversion and see where you fall on the scale in both conditions.