How to Know if Your Ads are Making Money: A Guide to Measuring Marketing Effectiveness for SMBs

If you’re spending money on ads for your business, you’ve probably lost sleep over this question: “Am I throwing money away on marketing that doesn’t work?”

You’re running Google Ads, Facebook ads, maybe some email marketing. Customers are buying, leads are coming in, but you have no idea which efforts deserve the credit. You might be doubling down on marketing that feels busy but isn’t actually making you money, while accidentally neglecting the quiet activities that consistently bring in your best customers.

Here’s the uncomfortable truth: most small business owners can’t confidently answer whether their ads are profitable because they’re asking the wrong question.

They ask: “What numbers should I be tracking?”

The right question is: “What do I need to know to make better marketing decisions?”

This diagnostic will help you figure out what you actually know about your marketing effectiveness, reveal the critical gaps costing you money, and show you exactly what’s needed to get real answers.

Understanding Marketing ROI and ROAS (and What They Don’t Tell You)

You’ve probably heard terms like “Return on Ad Spend” and “Marketing ROI” thrown around, maybe even tried to calculate them yourself. But what do these metrics actually measure, and more importantly, what don’t they tell you? Let’s clarify the differences.

ROAS (Return on Ad Spend)

Formula: Revenue from ads ÷ Ad spend

Example: You spend $2,500 on Google Ads in a month and generate $10,000 in revenue from those ads. Your ROAS is 4:1 (or 400%).

ROAS is what most advertising platforms show you by default. It’s useful for quickly evaluating individual campaigns or ad channels. If you’re spending $500 on Facebook ads and $500 on Instagram ads, ROAS tells you which platform is generating more revenue per dollar spent.

What it doesn’t show: ROAS only considers ad spend. It doesn’t account for your other marketing costs (salaries, tools, content creation) or whether you’re actually profitable after your cost of goods or service delivery.

Marketing ROI (Revenue-Based)

Formula: (Revenue from marketing – Total marketing costs) ÷ Total marketing costs × 100

Total marketing costs include:

• Ad spend across all platforms
• Marketing salaries and contractor fees
• Software and tools (email platform, analytics, CRM, design tools)
• Content production costs (photography, video, copywriting)
• Agency or consultant fees

Example: Your marketing generates $45,000 in revenue for the month. Your costs include: $8,000 in ad spend, $4,000 in marketing salaries, $800 in tools, and $1,200 in content production. Total marketing costs = $14,000. Your marketing ROI = ($45,000 – $14,000) ÷ $14,000 × 100 = 221%.

This gives you a more complete picture of your marketing program’s return. It’s useful for understanding whether your entire marketing operation (not just your ads) is generating positive returns on a revenue basis.

What it doesn’t account for: This calculation uses revenue, not profit. If you have significant costs to deliver your product or service, positive marketing ROI doesn’t guarantee you’re actually making money.

Marketing ROI (Profit-Based)

Formula: (Gross profit from marketing – Total marketing costs) ÷ Total marketing costs × 100

Where: Gross profit = Revenue – Cost of Goods Sold (COGS)

COGS includes the direct costs to deliver your product or service: manufacturing, inventory, and shipping for physical products; hosting, payment processing, and support costs for digital products or services.

Example: Using the same scenario above ($45,000 in revenue and $14,000 in total marketing costs) but now factor in your costs to deliver: $22,000 in COGS. Your gross profit = $45,000 – $22,000 = $23,000. Your profit-based marketing ROI = ($23,000 – $14,000) ÷ $14,000 × 100 = 64%.

Notice the difference: 221% ROI using revenue, but only 64% ROI when you account for delivery costs. You’re still profitable, but the picture is dramatically different.

Profit-based ROI is particularly important for businesses with thin margins or high COGS, like retail, physical products, or service businesses with significant delivery costs. It shows you whether your marketing is actually generating profit, not just revenue.

Why These Metrics Aren’t Enough

Here’s the uncomfortable reality: you can have positive ROAS, healthy revenue-based ROI, or even solid profit-based ROI, and still not know how to improve your marketing or stop wasting money.

These metrics tell you whether your marketing is working overall. They don’t tell you:

• Which specific campaigns or channels deserve more budget versus which are underperforming
• Where potential customers are abandoning your website or purchase process
• Whether visitors are interacting with multiple touchpoints before converting, and which combinations work best
• How your marketing efficiency is trending over time (whether performance is improving or quietly degrading)
• Which marketing sources bring customers who spend more or return more often

A business with 150% marketing ROI might still be wasting 40% of its budget on campaigns that don’t work, while under-investing in the campaigns that drive most of the results. Without visibility into the details, you can’t fix what’s broken or scale what’s working.

That’s what this guide helps you uncover: the specific insights you need to make better decisions about where to spend your marketing budget, beyond just knowing whether you’re profitable overall.

Before You Start: What Makes Marketing Measurable

Most business owners approach marketing measurement backwards. They dive straight into Google Analytics or their ad dashboards asking “What should I track?” without first asking “What do I need to know?”

This backwards approach creates the exact problem you’re experiencing right now: lots of numbers, but no clarity about whether your ads are actually making money.

Here’s the framework that makes measurement work:

First: Know what success looks like – What business outcome are you trying to achieve? More sales? More qualified leads? A bigger audience for future monetisation?

Second: Ask the right questions – What specific things do you need to know to determine if you’re achieving that outcome?

Third: Look for the data that answers those questions – Only now do you check numbers, and only the ones that answer your specific questions.

Fourth: Take action based on what you learn – The entire point of looking at data is to make better decisions about where to spend your marketing budget.

This isn’t just philosophy. This approach is what separates businesses that use data to grow from businesses that drown in analytics dashboards they don’t understand.

Throughout this diagnostic, we’ll follow this process. By the end, you’ll know exactly what questions you can answer about your marketing, which questions you’re still guessing at, and what’s needed to close those gaps.

Step 1: Define What “Making Money” Means for Your Business

Before you can know if your ads are making money, you need to define what “making money” actually means for your specific business. This isn’t semantic nitpicking, different business models require different measurements.

Quick Assessment: What’s Your Primary Business Goal Right Now?

Choose the ONE that best describes your current focus:

Option A: Make More Sales

• You have products or services available for immediate purchase
• Your main goal is increasing revenue from existing offerings
• Success = more purchase transactions, higher order values, or both
• Examples: E-commerce stores, online course creators, SaaS with self-serve signup, service providers with online booking

Option B: Get More Qualified Leads

• You have a sales process that requires conversation or consultation before purchase
• Your main goal is generating prospects for your sales team or personal follow-up
• Success = more contact form submissions, phone calls, consultation bookings, or demo requests from your ideal customers
• Examples: B2B services, high-ticket coaching, professional services (legal, accounting, consulting), real estate, complex product sales

Option C: Build Your Audience

• You’re building reach and awareness for future monetisation
• Your main goal is growing your subscriber base, followers, or community
• Success = more email subscribers, social followers, or community members who match your target audience
• Examples: Content creators, early-stage businesses, thought leaders, media companies

What This Tells You:

Your answer determines what metrics actually matter for measuring if your ads are “making money”:

• If you chose A (Sales): Your ads make money when revenue from ad-generated sales exceeds ad spend. You need to track: revenue per campaign, customer acquisition cost, and return on ad spend.
• If you chose B (Leads): Your ads make money when qualified leads convert to customers at a rate that justifies the cost. You need to track: lead quality by source, lead-to-customer conversion rate, and customer acquisition cost including both ad spend and sales effort.
• If you chose C (Audience): Your ads make money when you build an audience that you can later monetise. You need to track: subscriber acquisition cost, audience engagement rates, and eventual monetisation per subscriber.

Why This Matters:

Without this clarity, you’ll track vanity metrics that feel good but don’t tell you if your marketing investment is actually working. An e-commerce business celebrating 10,000 ad clicks means nothing if those clicks generated zero revenue. A B2B service celebrating 100 website visitors means nothing if none became qualified leads.

Your business outcome determines which questions you need to answer, which determines which data actually matters.

Write down your answer: My primary business outcome right now is: _______________

Keep this in mind as we move through the rest of the diagnostic. Every question should connect back to this outcome.

Step 2: The 8 Critical Questions About Your Marketing

Now that you know your business outcome, you can identify the specific questions you need to answer to determine if your marketing is making money.

But here’s the key insight: knowing your outcome isn’t enough. If you only tracked the outcome itself, you’d just see total sales or total leads. That tells you whether you hit your target, but it doesn’t tell you what’s working or what to fix.

To truly understand your marketing effectiveness, you need to ask questions about the complete customer journey, not just the end result.

Understanding the Customer Journey: From Discovery to Purchase

Before someone becomes a customer, they go through a predictable journey:

First, they discover you: They see your ad, find you in search, read your social post, or get a referral. They become aware that you exist and might solve their problem.

Then, they evaluate you: They visit your website, read your content, compare you to alternatives, watch your videos, or browse your products. They’re deciding if you’re right for them.

Finally, they take action: They buy your product, fill out your form, call your business, or book a consultation. They convert from prospect to customer.

This journey matters because marketing works differently at each stage:

• Some marketing is brilliant at getting attention (discovery) but doesn’t close sales
• Some marketing is excellent at closing sales but only works on people who already know you
• The best marketing strategy uses different approaches for different stages

The 8 Questions That Follow the Journey

The questions below aren’t random. They’re specifically designed to give you visibility across the entire customer journey, from first discovery through final conversion, plus the efficiency and quality of that journey.

Questions 1-3 help you understand what’s happening at each stage (discovery, evaluation, conversion)

Questions 4-5 help you understand how customers move through the journey

Questions 6-8 help you understand the efficiency and quality of your marketing across the journey

When you can answer all eight, you have complete visibility into not just whether you’re hitting your outcome, but exactly how customers are reaching it and where your marketing helps or hinders that process.

Let’s look at each question.

Questions About Your Marketing Performance

These eight questions map to the complete customer journey:

Discovery Stage: How do customers find you?

Question 1: Where is traffic coming from?

Not just “Facebook” vs “Google”, but whether the came from paid ads vs organic and which specific campaigns like “Spring Sale – Carousel Ad” vs “Summer Launch – Video Ad”.

Why This Question Matters:
This question reveals what’s working at the discovery stage. If you can’t identify whether they came for ads or organic nor specific campaigns, you can’t know which offers, audiences, or creative approaches get attention best. You’ll keep running all your campaigns at the same level instead of investing more in the discovery efforts that actually bring people to you.

Example of Why You Need This Answer: Imagine you spend $500 on a ‘Facebook Video Ad’ for your new product and $500 on a ‘Google Search Ad’ targeting competitor names. The Facebook ad brings 1,000 visitors to your site, while the Google ad brings only 100. This first answer doesn’t tell the whole story, but it provides the foundational data point: it confirms which advertising ‘taps’ are flowing and how strongly. It prevents you from making decisions based on a vague feeling that ‘Facebook is working’ and forces you to look at the performance of specific, individual efforts.

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Evaluation Stage: What happens when they’re on your website?

Question 2: What percentage of my website visitors take my desired action (buy, submit a form, call, etc.)?

This is your conversion rate, the fundamental metric that tells you how effectively your website turns interested visitors into customers.

Why This Question Matters:
This question reveals how well your evaluation stage works. This is the single most important measure of your website’s effectiveness. A high volume of visitors means nothing if none of them do what you want them to do. This percentage, your conversion rate, tells you if your website is a helpful ‘salesperson’ that convinces visitors to act, or a confusing ‘brochure’ that people glance at and then discard.

Example of Why You Need This Answer: From Question 1, your Google ad brought only 100 visitors, but 10 of them bought your product. That’s an excellent 10% conversion rate. Your Facebook ad brought 1,000 visitors, but only 5 bought something; a dismal 0.5% conversion rate. Suddenly, the ‘worse’ performing ad from Question 1 is revealed to be dramatically more effective at generating actual sales. Without this answer, you would mistakenly keep pouring money into the popular but unprofitable Facebook campaign, chasing traffic instead of revenue.

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Conversion Stage: Which marketing delivers the outcome?

Question 3: How does performance compare across my different marketing channels?

Can you see if email marketing generates better results than Instagram ads, or if Google search outperforms Facebook?

Why This Question Matters:
This question reveals which marketing channels actually drive your business outcome. Different channels work at different stages (Facebook might excel at discovery whilst email excels at conversion), but ultimately you need to know which ones deliver customers, not just awareness. If you can’t compare channels, you can’t reallocate budget to your best-performing marketing.

Example of Why You Need This Answer: You spend $3,000/month on Facebook and $2,000/month on Google Ads. Facebook brings 200 conversions at $15 each. Google brings 150 conversions at $13 each. But Google converters have 40% higher lifetime value. Without cross-channel comparison, you’d think Facebook is winning. With it, you shift budget to Google because it delivers better customers.

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Understanding the Journey: How do customers move through the stages?

Question 4: Are visitors interacting with multiple marketing touchpoints before converting?

For example: clicked a Facebook ad, came back later via Google search, read your email, then purchased?

Why This Question Matters:
Real customer journeys aren’t linear. Someone might discover you through Facebook (discovery), do nothing, then weeks later search for you on Google (evaluation continues), sign up for your email (deeper evaluation), then finally purchase after receiving your email sequence (conversion). If you only see the last touchpoint, you’ll give all credit to email and none to Facebook or Google, even though all three were necessary. This leads to cutting marketing that’s actually working.

Example of Why You Need This Answer: Your Google branded search ads show a 15% conversion rate and $8 cost per acquisition, amazing! But 70% of those searchers first discovered you through a Facebook ad they saw a week earlier. If you cut the Facebook budget to invest more in “high-performing” branded search, your overall sales would collapse because you’d have no awareness driving people to search for your brand.

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Question 5: Where are potential customers dropping off or abandoning their purchase process?

Can you identify specific pages or steps where people leave without converting?

Why This Question Matters:
This question reveals where your evaluation stage breaks down. Visitors might love your ads (discovery works) and engage with your content (evaluation starts well) but abandon at checkout. If you can’t see where people leave, you’re guessing at what needs improvement. You might redesign your homepage when the real problem is a confusing checkout or slow-loading pricing page.

Example of Why You Need This Answer: Your checkout page loads slowly on mobile, causing 60% of mobile users to abandon right before purchase. You don’t know this, so you keep spending money driving mobile traffic and wondering why your mobile conversion rate is terrible. Once you identify the drop-off point, you fix the loading issue and mobile conversions double.

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Efficiency: How much does the journey cost?

Question 6: How much does it cost me to acquire a customer from each marketing channel?

This is your Cost Per Acquisition (CPA), total marketing spend divided by customers acquired.

Why This Question Matters:
This question tells you if your marketing is profitable. A channel might bring lots of traffic (discovery works) and even decent conversion (evaluation works), but if it costs $200 to acquire a customer who only spends $100, the complete journey through that channel is unprofitable. Without knowing acquisition cost, you can’t determine which channels are worth scaling.

This question reveals the true financial efficiency of your marketing. To answer it accurately, it’s important to understand two related metrics:

1. Cost Per Acquisition (CPA): This is a marketing that tells you how much you paid for a lead, purchase, etc. It is a useful measure of a campaign’s efficiency on a revenue, not profit, basis.
2. Customer Acquisition Cost (CAC): This is a holistic business metric. It is calculated by taking your total sales and marketing expenses (including ad spend, salaries, and tool costs) over a period and dividing it by the number of new paying customers you acquired in that period. Knowing both prevents you from being misled by a low CPA that doesn’t translate into profitable customers.

Note: calculating CAC is more involved and is often not available by default and thus often requires a more advanced setup. This guide is focused on a foundational setup and will thus use CPA.

Example of Why You Need This Answer: Your Instagram ads have a $1.50 cost-per-click (seems great!) but generate a $180 CPA because only 0.5% of clickers convert. Your email marketing has no per-click cost but generates a $25 CPA because subscribers convert at 12%. Without CPA tracking, you’d invest more in the “cheap” Instagram clicks instead of the profitable email strategy.

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Quality: Who completes the journey successfully?

Question 7: Which marketing sources bring customers who spend more or become repeat buyers?

Some channels might bring cheaper customers who spend less. Others might cost more to acquire but generate higher lifetime value.

Why This Question Matters:
Not all customers who complete the journey are equally valuable. A channel might efficiently move people from discovery to conversion, but if those customers never return, you’re constantly acquiring new customers at full cost. Another channel might have higher acquisition cost but bring customers who buy repeatedly, making the complete lifetime economics far better.

Example of Why You Need This Answer: Facebook ads generate a $40 CPA with $85 average order value. Google Ads generate a $55 CPA with $140 average order value, and those customers have 3x higher repeat purchase rate. If you only looked at CPA, you’d shift budget to Facebook. When you factor in customer quality and lifetime value, Google delivers customers whose complete journey (including repeat purchases) is far more profitable.

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Trends: Is the journey improving or degrading?

Question 8: Is my marketing getting more or less efficient over time?

Are your conversion rates improving or declining? Is your cost per acquisition going up or down? Is the quality of traffic changing?

Why This Question Matters:
Marketing effectiveness changes over time. Audiences get saturated, competitors copy your approach, platforms change algorithms, seasonal patterns emerge. Without tracking trends across the complete journey, you won’t notice gradual degradation until it’s a crisis. Your conversion rate might drop from 5% to 3% over six months, a 40% decline in how well evaluation stage works, but it’s invisible if you only look at current numbers.

Example of Why You Need This Answer: Your Facebook ad performance slowly degrades as iOS privacy changes reduce targeting effectiveness. January: 4.5% conversion rate. April: 3.2% conversion rate. You don’t notice because you’re not tracking trends. By June, you’re paying 50% more per customer and don’t know why. With trend tracking, you’d have spotted the declining conversion rate in February and adjusted your strategy before wasting months of budget on degrading performance.

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Understanding What These Questions Tell You:

These eight questions aren’t arbitrary. They give you complete visibility into the customer journey:

• Questions 1-3 tell you WHAT is happening (which campaigns bring discovery, what conversion rate shows evaluation effectiveness, which channels drive the outcome)
• Questions 4-5 tell you HOW customers move through the journey (multi-touch paths, where they abandon)
• Questions 6-7 tell you the ECONOMICS of the journey (what it costs, what value it creates)
• Question 8 tells you if the journey is getting BETTER or WORSE

If you can answer all eight questions, you have visibility into the complete customer journey from discovery through conversion. You’ll know not just whether you’re hitting your business outcome, but exactly how customers are reaching it, what’s working at each stage, and where to focus your improvement efforts.

If you can’t answer them, you’re flying blind at one or more stages of the journey.

In the next step, we’ll try to answer these questions using whatever data you currently have access to. This is where you’ll discover what’s missing.

Step 3: Try to Answer Your Questions (This Is Where Gaps Appear)

Now comes the revealing part. You know the questions you need to answer. Let’s try to answer them using whatever marketing data you currently have access to.

For each question, you’ll attempt to find the answer. If you can’t find it, or if the data seems incomplete or unreliable, that reveals a gap in your measurement foundation.

Important: Don’t spend hours digging for answers. If you can’t find the answer within 2-3 minutes of looking, that’s your answer, you don’t have visibility into this question.

How to Approach This Step

For each of the 8 questions, you’ll:

1. Try to find the answer in your ad platforms or analytics
2. Mark whether you got a clear, confident answer
3. Note what prevented you from answering (this reveals what’s missing)

Let’s begin.

Question 1: Where is traffic coming from?

Where to Look:

Google Analytics (GA4):

• Navigate to Reports > Acquisition > Traffic acquisition.
• The report initially shows broad channel groupings. To see specific campaigns with context:
  • Click the dropdown arrow above the first column of the data table and select Session source/medium.
  • Click to + symbol next to the dropdown you just used and select Traffic source > Session campaign.

Try to Answer: Can you see your specific campaign names (like “Spring Sale Email” or “Facebook Carousel Ad – New Product”)?

Your Result:

• YES, I can see specific campaign names – I can distinguish between different campaigns I’m running
• PARTIALLY – I see generic sources like “facebook / cpc” or “google / organic” but not my specific campaign names
• NO, I cannot see this – I don’t have analytics, can’t log in, or only see very basic information

If You Answered YES:

Now you can see which campaigns actually bring people to your website. Look for patterns in your campaign list:

What to look for: Compare visitor numbers across your campaigns. Which campaigns bring significantly more traffic than others? Which bring almost none?

Action to take: Identify your top 3 performing campaigns by visitor volume and your bottom 3. For the bottom performers, ask yourself: “Am I spending meaningful money on these?” If yes, those are your first candidates to pause or reduce. Shift that budget to campaigns that are actually bringing people to your site. Don’t do this yet if you haven’t answered Questions 2-3 (traffic volume alone doesn’t mean success), but note which campaigns are failing at this first step of getting attention.

If You Answered PARTIALLY or NO:

What’s Missing:

• The UTM Parameter Gap: If you look at your GA4 report and see a lot of traffic from Facebook or your email provider listed under a generic source like facebook.com / referral or if many campaigns are grouped under (not set), you have a UTM gap. Google Analytics can’t automatically know the specifics of your non-Google campaigns. UTM parameters are simple tags you add to your ad URLs that act like labels, telling GA4 exactly which ad sent the traffic. Without them, you can’t accurately attribute traffic or sales to specific ads, forcing you to guess which ones are working.
• The Linked Accounts Gap: If you are running Google Ads but don’t see any campaign data in GA4, your Google Ads and Google Analytics accounts are likely not linked. This is a foundational setup step that allows the two platforms to share data seamlessly. Without this link, you cannot see crucial cost and performance data from Google Ads within your analytics reports.

What This Gap Costs You: You’re making budget decisions at the channel level (more Facebook, less Google) when you should be making them at the campaign level (more Spring Sale campaigns, less Awareness campaigns). You’re likely wasting 20-30% of your budget on underperforming campaigns within channels that look “okay” overall.

Question 2: What percentage of my website visitors take my desired action?

Where to Look:

Google Analytics (GA4):

• Navigate to Reports > Acquisition > Traffic acquisition.
• In the top-right corner, click the pencil icon (Customise report).   
• Click Metrics, then Add metric. Search for and select Session conversion rate. Click Apply and save the changes.
• Your report will now have a column showing the percentage of sessions from each campaign that resulted in a conversion.

Try to Answer: What is your conversion rate?

Your Result:

• YES, I know my conversion rate – I can see total visitors and total conversions, and calculate the percentage
• PARTIALLY – I see some numbers but they don’t match reality, or I’m not sure what’s being counted as a conversion
• NO, I cannot calculate this – I don’t have analytics, or I can’t find conversion data

If You Answered YES:

You now know your conversion rate, the single most important number for understanding if your website works.

What to look for: Write down your current conversion rate. Now compare it to these benchmarks:

• E-commerce: 2-3% is average, 5%+ is excellent
• Lead generation (B2B): 2-5% is average, 10%+ is excellent
• Email signups: 3-5% is average, 10%+ is excellent

Action to take: If you’re below average, your priority is fixing your website, not buying more traffic. Driving more visitors to a website that doesn’t convert is like pouring water into a leaky bucket. Even a small improvement in conversion rate (say, 2% to 3%) means 50% more customers from the same traffic. If you’re at or above average, your website is working reasonably well and you can focus on driving higher quality traffic through better campaigns.

If You Answered PARTIALLY or NO:

What’s Missing:

• The Key Event (Conversion) Gap: If the Session conversion rate column is 0% across the board, or if you have no “conversions” to analyse, you have a conversion tracking gap. GA4 does not automatically know what a “conversion” means for your business (e.g., a purchase, a form submission). You must manually tell GA4 which user actions are important by marking them as “Key Events” in the Admin section. Without this, you are measuring traffic but not outcomes, making it impossible to know if your ads are actually generating business.

What This Gap Costs You: Without knowing your conversion rate, every website change is a guess. You can’t tell if your new homepage design helped or hurt. You can’t identify if traffic quality is declining. You’re optimising blindly.

Question 3: How does performance compare across my different marketing channels?

Where to Look:

If you have Google Analytics (GA4):

• Go to Reports > Acquisition > Traffic Acquisition
• Look at the table showing different traffic sources
• Try to add a column or filter for conversions by source

Try to Answer: Can you compare conversion rate or revenue across Facebook, Google, Email, and other channels?

Your Result:

• YES, I can compare channels – I see traffic, conversions, and can calculate performance by source
• PARTIALLY – I can see traffic by channel but not conversions, or the numbers seem off
• NO, I cannot compare – I either don’t have this data, or I have to check each platform separately (Facebook Ads Manager, Google Ads, email platform) and can’t see them together

If You Answered YES:

You can now see which channels actually deliver your business outcome, not just which ones feel busy.

What to look for: Calculate a simple performance score for each channel: (Conversions from channel ÷ Visits from channel) × 100. This gives you the conversion rate by channel. List your channels from highest to lowest conversion rate.

Action to take: Your highest converting channels are doing something right. They’re either bringing more motivated visitors, or those visitors are seeing messaging that resonates better. Visit your website as if you came from that top channel (click through an actual ad or link from that source). What do they see? What’s the messaging? Compare this to your lowest converting channel. The difference often reveals why one works and another doesn’t. You might discover your Facebook ads promise something your landing page doesn’t deliver, or your email subscribers arrive at a generic homepage instead of content relevant to what they clicked.

If You Answered PARTIALLY or NO:

What’s Missing: Either conversion tracking (so you can’t see results by channel) or unified reporting (so you have to check multiple dashboards separately and can’t easily compare).

What This Gap Costs You: You’re making budget allocation decisions without knowing which channels actually perform best. You might be investing heavily in a channel with great engagement metrics but poor conversion, while under-investing in a quiet channel that consistently delivers customers.

Question 4: Are visitors interacting with multiple marketing touchpoints before converting?

Where to Look:

Google Analytics (GA4):

• In the left-hand menu, click on Advertising.
• Under the Attribution section, click on Attribution paths.   
• The data table at the bottom of this report shows the most common sequences of channels users interacted with on their path to conversion. A path like Paid Social > Organic Search > Email provides clear evidence of a multi-touch journey.

Try to Answer: Can you see when someone clicked your Facebook ad, then came back later via Google, then converted?

Your Result:

• YES, I can see multi-touch journeys – My analytics shows when customers interact with multiple marketing efforts before converting
• NO, I only see the last touchpoint – I only know what they did immediately before converting, not the full journey
• I DON’T KNOW – I’m not sure if this data exists or where to find it

If You Answered YES:

You can now see that real customer journeys aren’t linear. People rarely buy the first time they see you.

What to look for: Look at your conversion paths. How many touchpoints do customers typically interact with before converting? Do you see patterns like “Facebook ad → (nothing for a week) → Google search → Email → Purchase”?

Action to take: Identify which channels appear early in successful conversion paths (these are your discovery channels) versus which appear late (these are your closing channels). This is critical because they serve different purposes. Discovery channels (often social media, content, display ads) might look “inefficient” if you only credit the last click, but they’re starting journeys that close later. Closing channels (often email, branded search, retargeting) might look “efficient” but they only work because discovery channels fed them. The action: stop comparing discovery and closing channels as if they compete. They work together. If you cut discovery budget because “closing channels have better ROI”, you’ll starve your closing channels of people to close.

If You Answered NO or I DON’T KNOW:

What’s Missing:

• The Incomplete Channel Tracking Gap: If your attribution paths look very simple (e.g., mostly Direct or Organic Search) and you know you are running ads on social media or sending email newsletters, this reveals a tracking gap. It’s highly likely that the traffic from those unlisted channels is not being identified correctly because you are not using UTM parameters (see Q1 gap). This causes GA4 to misattribute that traffic, often lumping it into the Direct channel. The cost of this gap is severe: you will drastically undervalue the channels that introduce and nurture customers, potentially leading you to cut the budget for your most effective awareness campaigns.

What This Gap Costs You: You’re giving all the credit to “closing” touchpoints (like retargeting ads or branded search) and none to “awareness” touchpoints (like social media or content marketing) that started the journey. This leads to cutting budgets on channels that are actually working.

Question 5: Where are potential customers dropping off or abandoning their purchase process?

Where to Look:

If you have Google Analytics (GA4):

• In the left-hand menu, select Explore.
• Choose the Funnel exploration template.   
• Define the steps of your process. For an e-commerce site, this would be a series of events like: Step 1: view_item, Step 2: add_to_cart, Step 3: begin_checkout, Step 4: purchase.   
• The report will generate a bar chart showing how many users completed each step and, more importantly, the percentage who dropped off between steps. A large drop-off between begin_checkout and purchase is a major red flag.

Or check if you have session recordings:

• Microsoft Clarity, Hotjar, or similar tools
• Watch actual recordings of users navigating your site

Try to Answer: Can you identify specific pages where visitors commonly abandon before converting?

Your Result:

• YES, I can identify drop-off points – I can see where in the process people commonly leave
• PARTIALLY – I have some idea but it’s not clear or the data seems incomplete
• NO, I cannot see this – I don’t have visibility into user behaviour on my website

If You Answered YES:

You can now see where your website is losing people who were interested enough to engage.

What to look for: Look at your funnel or user flow data. Identify the page or step with the highest exit rate, the place where the biggest percentage of visitors leave without moving forward. Common problem areas: pricing pages (sticker shock), checkout pages (too complicated), contact forms (asking for too much information), product pages (missing key details).

Action to take: Focus on your single biggest drop-off point first. Visit that page yourself and ask: “What would make me hesitate or leave right now?” Common issues are: page loads slowly, information is unclear, the next step isn’t obvious, you’re asking for information too early (like requiring account creation before allowing someone to see shipping costs), or there’s a trust issue (no clear return policy, no security badges at checkout). Pick one specific thing to fix. For example, if 60% of people abandon at checkout, and you notice you ask for phone number before showing shipping cost, try showing the cost first or making phone number optional. Fix the biggest problem first, measure if it improves, then move to the next issue.

If You Answered PARTIALLY or NO:

What’s Missing:

• The Event Tracking Gap: If you try to build a funnel and find that you have no events like add_to_cart or begin_checkout to choose from, you have an event tracking gap. Standard GA4 installations track page views, but more specific actions (like button clicks or form submissions) often require additional setup. For e-commerce, this means enabling enhanced e-commerce tracking. Without these specific events, you have no visibility into your most critical customer journeys, and you can only guess where and why potential customers are leaving.

What This Gap Costs You: You’re trying to improve conversion rate by guessing what’s broken. You might redesign your homepage when the real issue is a slow-loading checkout page, or a confusing pricing structure. You’re fixing the wrong things.

Question 6: How much does it cost me to acquire a customer from each marketing channel?

Where to Look:

This requires combining data from multiple places:

For Paid Advertising:

• Facebook Ads Manager: Look at “Cost per Purchase” or “Cost per Lead”
• Google Ads: Look at “Cost / Conv” (cost per conversion)

For All Channels Combined:

• You need: Total marketing spend per channel ÷ Number of customers acquired from that channel

Try to Answer: What is your cost per acquisition a (CPA) for each major marketing channel?

Your Result:

• YES, I know my CPA by channel – I can see or calculate how much I spend to get a customer from each source
• PARTIALLY – My ad platforms show some cost data, but I’m not sure if it’s accurate or complete
• NO, I cannot calculate this – I don’t have the data to figure out acquisition cost per channel

f You Answered YES:

You now know the most important number for determining if your marketing is profitable: what you pay to get a customer.

What to look for: Write down your cost per acquisition (CPA) for each channel. Now calculate your profit per customer: (Average order value) minus (Cost of delivering product/service) minus (Customer acquisition cost). If this number is positive, that channel is profitable. If it’s negative, you’re losing money on every customer from that channel.

Action to take: Identify any channel where you’re paying more to acquire a customer than you make from them. This is your most urgent problem. You have three options: improve the channel’s efficiency (better targeting, better ads, better landing pages to increase conversion rate and lower CPA), increase prices or order value to improve profit per customer, or stop using that channel entirely. For profitable channels, calculate how much room you have to scale. If you’re paying $40 to acquire customers who generate $120 in profit, you can afford to spend much more on that channel. Most small businesses under-invest in channels that are already working because they focus on the total spend rather than the return.

If You Answered PARTIALLY or NO:

What’s Missing: Conversion value tracking and proper attribution. Your ad platforms might show you spent $5,000, but if they can’t track which spending led to actual customers, you can’t calculate true acquisition cost.

What This Gap Costs You: You can’t determine if your marketing is profitable. You might be paying $150 to acquire customers who only spend $100. Or you might be avoiding a channel that seems expensive but actually has the best ROI.

Question 7: Which marketing sources bring customers who spend more or become repeat buyers?

Where to Look:

Google Analytics (GA4):

• Navigate to Explore and select the User lifetime template.   
• In the Tab Settings column, make sure First user source / medium is under Rows and Purchase revenue is under Values.
• The report will show the total revenue generated by users who were first acquired by each of your marketing channels over their entire lifetime. By dividing Purchase revenue by Total users for each channel, you can find the average lifetime value (LTV) per user from that source.

Or check your e-commerce platform:

• Shopify, WooCommerce, etc.
• Look at customer reports
• Try to segment by how they first found you

Try to Answer: Do customers from Facebook spend more or less than customers from Google? Do email-acquired customers return more often?

Your Result:

• YES, I can see customer value by source – I know which channels bring higher-value or repeat customers
• PARTIALLY – I see some revenue data but can’t connect it back to marketing source
• NO, I cannot see this – I have no way to compare customer quality by channel

If You Answered YES:

You can now see that not all customers are equally valuable, even if they cost the same to acquire.

What to look for: Compare average order value and repeat purchase rate across your marketing channels. You might discover that Facebook customers average $65 per order with 15% returning, whilst Google customers average $95 per order with 40% returning. Calculate rough lifetime value: (Average order value) × (1 + Repeat purchase rate). In this example, Facebook customers are worth roughly $75 over time ($65 × 1.15) whilst Google customers are worth $133 ($95 × 1.40).

Action to take: Reconsider your channel priorities based on customer quality, not just acquisition cost. A channel with $50 CPA bringing customers worth $150 over their lifetime is far better than a channel with $30 CPA bringing customers worth $60 who never return. Look at your highest lifetime value channel. Even if it costs more to acquire customers there, you can afford to spend more because they’re worth more. Shift budget away from channels that bring one-time buyers towards channels that bring loyal customers, even if the cost per acquisition initially seems higher.

If You Answered PARTIALLY or NO:

What’s Missing: Customer value tracking connected to acquisition source. You need analytics that tracks not just the first purchase but also repeat purchases, and connects that back to how they originally found you.

What This Gap Costs You: You’re optimising for acquisition cost alone, potentially driving down customer quality. You might be investing in channels that bring cheap customers who never return, while neglecting channels that bring loyal, high-value customers.

Question 8: Is my marketing getting more or less efficient over time?

Where to Look:

Any of your analytics or ad platforms:

• Look at conversion rate this month vs last month vs same month last year
• Look at cost per acquisition over time
• Look at revenue per visitor trends

Try to Answer: Are your key metrics steady, improving or declining over the past 3-6 months?

Your Result:

• YES, I track trends – I regularly check how metrics change week-over-week and month-over-month
• PARTIALLY – I look at current numbers but don’t systematically compare to previous periods
• NO, I only see current data – I don’t have historical data or don’t know how to compare periods

If You Answered YES:

You can now see whether your marketing is improving or degrading before it becomes a crisis.

What to look for: Compare your key metrics (conversion rate, cost per acquisition, customer acquisition cost) from this month versus three months ago and six months ago. Look for trends. Is your conversion rate declining? Is your cost per customer increasing? Even small monthly changes compound. A conversion rate dropping from 4% to 3.5% to 3% over three months means you’re now getting 25% fewer customers from the same traffic.

Action to take: If you spot a declining trend, investigate immediately. Declining conversion rates often mean: your audience is getting saturated (they’ve seen your ads too many times), competitors have copied your approach, your offer has become less compelling, or platform changes affected your targeting (like iOS privacy updates reducing Facebook’s targeting accuracy). Increasing costs often mean: auction competition has increased, your ad creative has become stale (lower click-through rates mean you pay more per click), or your Quality Score has dropped. The specific action depends on what’s declining, but the key is addressing it now rather than waiting until performance has collapsed. If you spot an improving trend, document what you changed recently so you can replicate it.

If You Answered PARTIALLY or NO:

What’s Missing: Systematic reporting and trend analysis. Even if you have good current data, you need to be looking at it over time to spot gradual improvements or declines.

What This Gap Costs You: You won’t notice slow degradation until it’s a crisis. Your conversion rate might drop 30% over six months, but because it happens gradually, you don’t notice. By the time you realise something’s wrong, you’ve wasted months of budget and lost momentum.

Count Your Answers

How many questions could you answer with clear, confident data?

Write down your score: _____ out of 8 questions answered

What Your Score Means:

• 7-8 questions answered: You have strong measurement foundation (rare without professional setup)
• 5-6 questions answered: You have decent visibility but critical gaps remain
• 3-4 questions answered: You have partial data but major blind spots
• 0-2 questions answered: You’re essentially flying blind (unfortunately common)

More importantly than your score is understanding WHAT prevented you from answering each question. Those are your specific gaps.

In the next section, we’ll interpret what your gaps mean and what you need to do about them.

Your Diagnostic Results: What You Need

Based on your score, here’s what you need to do:

If You Answered 0-4 Questions: You Need Measurement Foundation

What’s Missing:

You likely encountered these problems:

• No Google Analytics, or can’t log in, or it’s not set up properly
• Marketing links don’t have campaign tracking (no UTM parameters)
• No conversion tracking, can’t see purchases or leads
• Can’t compare channels because data is scattered across different platforms

What This Means:

You cannot reliably answer “Are my ads making money?” You’re making marketing decisions with 40-60% of the information missing, potentially wasting 30-50% of your marketing budget.

What You Need:

A complete measurement foundation:

• Google Analytics 4 properly configured
• Campaign tracking (UTM parameters) on all marketing links
• Conversion tracking for your goal actions
• Platform integration (Facebook Pixel, Google Ads conversion tracking)

Your Options:

Build it yourself or have it done professionally. Read How to Build Your Marketing Measurement Foundation if you want understand what’s involved and have a go at it.

If You Answered 5-6 Questions: You Need to Complete Your Foundation

What’s Missing:

You likely found:

• Can see traffic but not specific campaigns
• Conversions tracked but numbers don’t match reality
• Can’t see customer journeys or which sources bring better customers
• Not systematically tracking trends

What This Means:

You have partial visibility but are still missing insights that could improve marketing efficiency by 20-30%. Some of your data may be misleading you.

What You Need:

Fill the specific gaps you identified. Address broken or incomplete tracking before adding new capabilities. Consider a measurement audit if you’re unsure what needs fixing.

If You Answered 7-8 Questions: You’re Ready for Strategic Measurement

What This Means:

You have solid measurement foundation. You can answer most important questions about marketing effectiveness.

Your Opportunity:

Move from reporting (“what happened”) to strategic measurement (“what should I do next”). Turn your good data into systematic competitive advantage with action playbooks, leading indicators, and systematic optimisation frameworks.

Learn about The Actionable Measurement Framework when you’re ready to scale.

What Makes This Different

This diagnostic worked because you:

1. Defined your business outcome first
2. Identified specific questions you need to answer
3. Tried to find data to answer those questions
4. Discovered gaps naturally through that process

The process is: Outcome → Questions → Data → Action

Not: Tool → Data → Confusion

This is what separates businesses that use analytics effectively from those who have analytics installed but still make decisions by gut feel.

Your Next Steps

If you need measurement foundation: Read How to Build Your Marketing Measurement Foundation

If you want it done professionally: Learn about our Measurement Foundation Service

If you have foundation and want strategic measurement: Explore the Actionable Measurement Framework

The Bottom Line:

You now know which questions you can answer and which ones you’re guessing at. Every question you couldn’t answer represents a decision you’re making based on incomplete information, potentially costing you money.

The businesses that dominate their markets aren’t necessarily the ones with bigger budgets. They’re the ones who know what works and do more of it systematically.

That knowledge comes from having the right questions and the data to answer them.