How do you know if an ad campaign is performing well?

An ad campaign is performing well when its cost-per-conversion and return on ad spend (ROAS) meet or beat the business’s actual profit margins, not simply when it’s generating a high volume of clicks or impressions, since cheap clicks that don’t convert into revenue don’t indicate success regardless of how large the number looks. ROAS is calculated as revenue generated divided by ad spend, and the ‘good’ threshold varies enormously by industry and margin structure; a business with thin margins might need a ROAS target such as 5x to be profitable, while a high-margin business might be comfortably profitable at 2x.

Click-through rate (CTR) and cost-per-click (CPC) are useful secondary diagnostics for troubleshooting rather than final success measures: a low CTR usually points to a problem with ad creative or targeting relevance, while a high CPC combined with low conversions often points to overly competitive or poorly matched keyword targeting.

Because these metrics interact, campaign evaluation is usually done over a meaningful time window (at least a week or two, and often longer for campaigns with longer sales cycles) rather than judged from the first day or two of data, since ad platforms’ auction algorithms typically need an initial learning period to optimise delivery.