TL;DR: Google Ads work when they bring you customers at a cost that makes sense for your business. Check five numbers: click-through rate, cost per click, conversion rate, cost per lead, and Quality Score. Compare them to your industry benchmarks (included below). If two or more are off, your campaign needs attention. There’s a 15-minute self-audit checklist at the end.
I talk to small business owners about Google Ads a lot. The conversation usually starts the same way: “I’m spending money on Google Ads but I have no idea if it’s actually doing anything.”
That’s not a dumb question. Google’s dashboard throws dozens of metrics at you, most of them irrelevant to whether your phone is ringing more than it was before you started paying.
Here’s what I’ve learned from auditing Google Ads accounts for businesses across Melbourne: you only need to look at five numbers. Everything else is noise until those five are healthy.
What does “working” actually mean for Google Ads?
Google Ads is working when it generates leads or sales at a cost that leaves you with profit. That’s it.
Not impressions. Not clicks. Not “brand awareness.” Those are activity metrics, and they can all look fantastic while your campaign quietly burns money. I’ve seen accounts with thousands of clicks and a conversion rate of 0.3%. The dashboard looked busy. The phone was silent.
The question isn’t “are people seeing my ads?” It’s “are people seeing my ads, clicking on them, and then doing the thing I want them to do?” Calling you, filling out a form, booking an appointment, buying something.
I audited one account recently where the business owner was thrilled because impressions were up 400% - from 12,000 to 50,000 per month. Great. But conversions had dropped from 15 per month to 8. The ads were being shown to more people, yes - just not the right people. Impressions without conversions is just expensive visibility.
A well-running campaign looks like this: you’re paying AUD $45 per lead for a service worth $800 to you, your Quality Score is 7 or above, and your search terms report is 90% relevant traffic. That’s the target. If your numbers look nothing like that, keep reading.
If you can’t answer that question from your dashboard, you probably don’t have conversion tracking set up properly. That’s the first thing to fix, and I’ll cover it in the audit checklist below.
The 5 numbers you need to check right now
WordStream analysed 16,000 Google Ads campaigns across every major industry in 2025. Here’s what they found, and what each number means for your business.
1. Click-through rate (CTR) - are people clicking your ads?
Your CTR tells you whether your ad copy and targeting are relevant to what people are searching for. The average across all industries is 6.66% (WordStream, 2025). If you’re below 3%, your ads probably aren’t matching what people are looking for.
A low CTR usually means one of two things: your keywords don’t match your ads, or your ad copy isn’t convincing enough to get the click. Sometimes both. I’ve seen accounts where the ads were actually decent, but they were showing up for searches that had nothing to do with the business. That’s a targeting problem, not a copy problem, and the fix is different.
For context, restaurants and food businesses average 7.58% CTR, while attorneys sit at 5.97%. Your industry matters here - don’t compare a law firm’s CTR to a pizza shop’s.
2. Cost per click (CPC) - what are you paying for each visitor?
The global average CPC is $5.26 USD (WordStream, 2025). In Australia, the average sits around AUD $3.60 overall, ranging from $1.20 for e-commerce to $12.80 for legal and financial services (3P Digital, citing Skai Digital Marketing Report 2024).
A high CPC isn’t automatically bad. A dentist paying $7.85 per click but converting 9.08% of those clicks into patients is doing fine. A retailer paying $7.85 with a 1% conversion rate is not.
3. Conversion rate - are visitors actually doing something?
This is the number that matters most. The average conversion rate across all industries is 7.52% (WordStream, 2025). If yours is below 2%, something is wrong with your landing page, your offer, or both.
Auto repair and service businesses see the highest conversion rates at 14.67%. Real estate sits at the bottom at 3.28%. Know your industry benchmark before you panic about yours.
4. Cost per lead (CPL) - what does each enquiry cost you?
The average cost per lead across all industries is $70.11 USD (WordStream, 2025). In Australia, it varies dramatically by sector:
| Industry | Australian CPA |
|---|---|
| E-commerce | AUD $28 |
| Healthcare | AUD $72 |
| Financial services | AUD $110 |
| B2B / SaaS | AUD $130 |
| Legal | AUD $145 |
Source: Skai Digital Marketing Report 2024, via 3P Digital
If your cost per lead is more than double your industry average, that’s worth investigating. If it’s below average, you might have room to increase your budget and get more leads at a price that works.
5. Quality Score - does Google think your ads are any good?
Quality Score is Google’s 1-10 rating of how relevant your ad and landing page are to what someone searched for. It directly affects what you pay per click.
A Quality Score of 10 gets you roughly a 50% discount on CPC compared to the average score of 5. A Quality Score of 1 costs you about 600% more (WordStream/Larry Kim study, analysis of accounts with approximately $100M annualised spend).
Most people never check their Quality Score. It’s hidden in the Campaigns view - you need to add the column manually. If your scores are sitting at 3 or 4, you’re overpaying for every single click.
The good news is that Quality Score is fixable. It’s made up of three components: expected CTR, ad relevance, and landing page experience. Google shows you each one individually. If your landing page experience is “below average,” that’s where to focus. Usually it means the page your ad points to doesn’t clearly match what the ad promised.
How to read your Google Ads dashboard without losing your mind
Google’s interface changes constantly, and it shows you way too much data by default. Here’s how I navigate it when I’m auditing an account.
Start in Campaigns, not Overview. The Overview tab is Google’s curated highlight reel. It tells you what Google wants you to see, not necessarily what you need to see. Go to Campaigns instead.
Add the columns that matter. By default, you’ll see impressions and clicks. You need to add: CTR, Avg. CPC, Conversions, Conv. rate, Cost/conv., and Quality Score. Right-click on any column header and select “Modify columns” to add them.
Filter by date range. Look at the last 30 days first. If you’ve been running ads for a while, compare to the previous 30-day period. Are things getting better or worse?
Check the Search Terms report. This is the most revealing report in the entire dashboard, and it’s the one most business owners have never looked at. It shows you the actual words people typed before they saw your ad. Go to Keywords, then Search Terms.
You will almost certainly find searches in there that have nothing to do with your business. Every click on an irrelevant search is money gone. I once audited an account for a Melbourne landscaper who was spending $1,200 per month. About $400 of that was going to clicks from people searching “landscape painting classes” and “landscape photography tips.” Different kind of landscape. After adding negative keywords and tightening match types, their cost per lead dropped from $95 to $42.
The fix is adding negative keywords - telling Google “don’t show my ad when someone searches for this.” It takes ten minutes and can save you hundreds of dollars a month.
Brad Geddes, one of the most respected PPC experts in the industry, puts it this way in his 2026 Search Engine Land article: not adding your top search terms as keywords and not reviewing negative keywords are two of the top 10 mistakes he sees across Google Ads accounts.
The 5 most common ways small businesses waste their ad budget
I’ve borrowed from Brad Geddes’ list (Search Engine Land, January 2026) and added what I see specifically in Australian SMB accounts.
1. No conversion tracking (or broken tracking)
If you don’t know how many people called you, filled out your form, or booked an appointment after clicking your ad, you can’t tell if anything is working. You’re flying blind.
Google’s own documentation on conversion measurement walks through the setup, and Stape has a detailed 2026 guide covering both client-side and server-side tracking methods. If you’re not sure whether your tracking is working, try this: fill out your own contact form or call your own tracking number. If a conversion doesn’t appear in your Google Ads account within 24 hours, something is broken.
2. Ignoring the Search Terms report
I mentioned this above because it’s the single biggest source of waste I see. I regularly find 20-30% of ad spend going to completely irrelevant searches. One Melbourne tradie I audited had a monthly spend of $2,100 - and $630 of it was going to clicks from people searching for DIY tutorials. Those people were never going to hire him. We cut that waste in the first week just by adding negative keywords.
3. Blindly accepting Google’s recommendations
Google’s Optimisation Score and auto-applied recommendations are designed to get you to spend more. Geddes says it plainly:
“Google’s recommendations are sometimes in your best interest. They are always in Google’s best interest.”
- Brad Geddes, Search Engine Land, January 2026
Some recommendations are fine. Some will broaden your targeting to irrelevant audiences or switch you to ad formats that don’t suit your business. Check each one individually. Don’t hit “Apply all.”
4. Using broad match keywords with automated bidding and no guardrails
Broad match can work, but only if you pair it with a target CPA or target ROAS bidding strategy, and you’re watching the Search Terms report closely. Without those guardrails, broad match will happily show your ad for searches that have nothing to do with what you sell.
5. Not checking Quality Score
I covered this above, but the cost difference between a QS of 3 and a QS of 8 is enormous. You can improve Quality Score by making sure your ad copy matches your keywords, and that your landing page actually delivers on what the ad promises. It’s not magic. It’s relevance.
What your ads cost in Australia (and whether that’s normal)
Google Ads account for 41% of Australian performance marketing budgets (IAB Australia 2024, via 3P Digital). Australian digital ad spend hit $15.6 billion in FY2024, up 8.3% year-on-year. SMEs typically allocate 12-18% of annual revenue to marketing, with 58-65% of that going to performance channels like Google Ads (IBISWorld Australia, via 3P Digital).
So yes, most of your competitors are running Google Ads. The question is whether they’re running them well.
Google’s own estimate is that businesses earn $2 in revenue for every $1 spent on Google Ads. That figure comes from their Economic Impact methodology (developed by Google’s chief economist Hal Varian), so take it with a grain of salt - it’s Google measuring the value of Google. The actual return varies wildly by industry, targeting, and how well the campaign is set up.
In Australia, the average return on ad spend (ROAS) is 5.2x, meaning $5.20 back for every $1 spent (Skai Digital Marketing Report 2024, via 3P Digital). That’s the average. Plenty of businesses are below that, and plenty are above it.
The point isn’t what the average business gets. It’s what your business gets. And you can only answer that if you have conversion tracking working and you know your cost per lead. If you’re not sure about the technical health of your site more broadly, I wrote a separate guide on Core Web Vitals and what they mean for your business.
A 15-minute self-audit checklist
You can run through this in one sitting. You’ll need access to your Google Ads account and about 15 minutes.
- Verify your conversion tracking. Go to Tools > Conversions. Are there active conversion actions? Do they show recent conversions? If this page is empty or the last conversion was months ago, stop here and fix this first.
- Pull up the Search Terms report. Go to Keywords > Search Terms. Sort by cost. Are the top 10 most expensive search terms relevant to your business? Add irrelevant terms as negative keywords.
- Compare your metrics to benchmarks. Check your CTR, CPC, conversion rate, and cost per lead against the industry benchmarks in this article. If two or more are significantly worse than average, your campaign needs work.
- Check your Quality Scores. Add the Quality Score column to your Campaigns view. Anything below 5 is costing you money. Look at the landing page experience and ad relevance components to see what to fix.
- Review Google’s recommendations with scepticism. Go to Recommendations. Read each one. Ignore the Optimisation Score number - it’s designed to get you to spend more. Only apply recommendations that make sense for your specific business.
If you get through this checklist and everything looks healthy, your ads are probably working fine. You might still want to optimise, but at least you know the foundation is solid.
If you find problems at multiple steps, it might be worth getting a professional audit. Most of the issues I find in SMB accounts can be fixed in a few hours. The hardest part is usually the first one - getting conversion tracking working properly. Everything after that is tuning.
One more thing: 47% of Australian SMBs still use last-click attribution (HubSpot 2024, via 3P Digital). That means almost half of businesses are only crediting the very last click before a sale, which can make Google Ads look worse than it actually is. If a customer saw your ad, clicked it, then came back three days later through Google organic and bought - last-click gives Google Ads zero credit. Something to keep in mind when you’re reading your numbers.
If your numbers are off, here’s what to fix first
If you ran the audit and found problems, don’t try to fix everything at once. Start with the metric that’s furthest from the benchmark and work from there.
- Low CTR (below 3%): Your ads aren’t matching what people are searching for. Rewrite your ad copy to more closely match your keywords, or tighten your keyword targeting. Check that your ad groups aren’t mixing unrelated keywords together.
- High CPC (more than 2x your industry benchmark): Check your Quality Score first - a low score inflates your costs. Add negative keywords to stop paying for irrelevant clicks. If your Quality Score is fine, you might just be in a competitive market, and the fix is improving your conversion rate instead.
- Low conversion rate (below 2%): The problem is almost always the landing page. Make sure it delivers exactly what the ad promised, loads fast on mobile, and has a clear call to action above the fold. Check your site speed and Core Web Vitals while you’re at it.
- High cost per lead (more than 2x industry average): This is usually a combination of the issues above. Fix CTR and conversion rate first, and cost per lead will come down.
- Low Quality Score (below 5): Look at the three components Google shows you - expected CTR, ad relevance, and landing page experience. Fix whichever one says “below average” first.
Full disclosure: I offer Google Ads audits as a service. The framework above works regardless of who implements it - if you’re comfortable in the dashboard, you can absolutely do this yourself. I wrote this article so you’d have the benchmarks and the process to check your own campaigns without needing to hire anyone.
Frequently asked questions
How much should I be spending on Google Ads?
There’s no universal answer. It depends on your industry, your cost per lead, and how many leads you need. Start by working backwards: if a customer is worth $500 to you and your cost per lead is $70, you need about 7 leads to pay for one customer. Set your budget based on how many customers you want per month, then multiply by your cost per lead.
Are Google Ads worth it for small businesses?
For most service businesses, yes. If people search for what you do (plumber, dentist, accountant, web designer), Google Ads puts you in front of them at the exact moment they’re looking. The key is having conversion tracking set up and knowing your cost per lead. Without those, you’re guessing. If you’re also thinking about how AI search tools like ChatGPT and Perplexity affect your visibility, that’s called generative engine optimisation (GEO) — it’s part of the SEO work I do with clients.
How do I know if my Google Ads agency is doing a good job?
Ask them three questions: what is my cost per lead, how has it changed over the last 3 months, and what changes have you made recently? If they can’t answer all three clearly and specifically, that’s a red flag. You should have full access to your own Google Ads account - not a separate “reporting dashboard” that shows you filtered data. If your agency won’t give you direct access to the Google Ads account, I’d be asking why.
What’s a good conversion rate for Google Ads?
The average across all industries is 7.52% (WordStream, 2025). Anything above 5% is solid for most industries. Below 2% means your landing page or offer needs work. Don’t compare yourself to the overall average though - check your specific industry benchmark.
If you’d like me to run through a Google Ads audit for your business, get in touch. You can read more about how I work or go straight to booking a call. I work with businesses across Melbourne and I’m always happy to have a look.
All benchmarks in this article were verified against their original sources in April 2026. Industry benchmarks are typically updated annually - check the linked sources for the latest figures.