In the ever-evolving landscape of digital marketing, Google Ad Grants present an invaluable opportunity for nonprofits. Eligible organizations can receive up to $10,000 of in-kind advertising per month to create digital ads and promote them in Google’s search results.
Google Ad Grants are an exciting opportunity to bolster your online presence and reach the people most interested in engaging. The potential is great, but an integral aspect of effective grant management is clearly understanding return on investment. How can you accurately measure the impact of Google Ad Grants on long-term revenue?
With a few calculations, you can estimate your expected net yearly revenue. Let’s walk through the steps so you can measure the impact Google Ad Grants can have on your organization.
What You’ll Need
To calculate your net revenue, you’ll need four values specific to your organization.
1. Average Membership Lifetime
Average Membership Lifetime is the average amount of time a member will maintain their membership.
To calculate your Average Membership Lifetime, add all of your membership lifespans (measured in months). Divide the sum by the total number of members.
The most common range of Average Membership Lifetime our team has seen while partnering with nonprofits is 30-48 months.
You can find this value in Daxko Operations:
- Run the “Average Length of Membership (months)” report under Custom Reports > Global Reports > Membership
- Select the appropriate branches and date range to find your Average Membership Lifetime.
2. Average Membership Cost
Average Membership Cost is the average amount your members spend on their memberships each month.
If you only have one membership level, the cost of that membership is your Average Membership Cost. Some organizations have multiple memberships with varying prices. In that case, pull a list of all of your memberships and the number of active members for each membership type.
Multiply each membership type by the number of that membership’s active members. Add the resulting values together and divide by the number of total active units. The result will be your Average Membership Cost.
The most common range of Average Membership Cost our team has seen while partnering with nonprofits is $40-$60 per month.
You can find this value in Daxko Operations:
- Go to Membership > Membership Type. Copy the information for all branches and paste it into an Excel sheet.
- Adjust all fees to reflect monthly values. For example, divide annual fees by 12.
- Multiply the number of units by monthly fee to get the total for each membership type.
- Sum the total for each membership type to get total monthly billing.
- Sum the total number of units.
- Divide the total monthly billing by total number of units to find your Average Membership Cost.
3. Customer Lifetime Value
Customer Lifetime Value is the total predicted revenue expected from an average member during their lifetime as a paying member.
To calculate your Customer Lifetime Value, multiply your Average Membership Lifetime by your Average Membership Cost. Your result is the gross revenue you can expect from one Google Ad Grant conversion.
This value only includes the average revenue you’ll make through membership costs. It won’t include additional sources of revenue you may have for each member like fees, referrals, or donations.
4. Marketing Cost
Marketing Cost is the total amount you pay each month to manage your Google Ad Grants. This can include resources specifically set aside to manage your own Google Ad Grant campaigns. It can also include the cost of paying an external partner to manage your campaigns for you.
How to Calculate Your Google Ad Grants Net Yearly Revenue
Now you can calculate the net revenue you can expect to earn by investing in Google Ad Grant management. Let’s walk through the steps with an example.
Start by calculating an example Customer Lifetime Value. In this example, the Average Membership Lifetime is 39 months and the Average Membership Cost is $50.
Multiply those values together to get a Customer Lifetime Value of $1,950.
Next, calculate your net monthly revenue, or your gross revenue from Google Ad Grants minus any expenses in the same period. In this example, we’ll only include the Marketing Cost. When calculating your organization’s net monthly revenue, make sure to include any additional overhead costs that are unique to your Google Ad Grant management.
The Marketing Cost in this example is $715.
To calculate net monthly revenue, subtract the Marketing Cost from the Customer Lifetime Value to get a total of $1,235. $1,235 is the net monthly revenue expected from one Google Ad Grant conversion.
If you estimate that you'll maintain one conversion per month, you can then multiply that value by 12. The result is a net yearly revenue of $14,820.
$14,820 reflects the bare minimum of one conversion each month with an average Customer Lifetime Value. That value can quickly add up as your organization dedicates more resources to Google Ad Grant campaigns and engages more members.
Ready to Maximize Your Google Ad Grants?
Optimizing your grants every month can feel like a lot to handle. That’s why Daxko’s team of experts is here to help.
We’re here to support you each step of the way and keep the grants coming in. Schedule a demo with our team to get started.