Read This Before Hiring for Google Ads Lead Generation, Pt 1: The Basics

Before we begin…

This post gives a “bird’s eye view” of some of the considerations and discussions that should take place when engaging a Google Ads vendor to manage lead generation.

For the sake of brevity, this post:

• is written at a simple, broad, and basic level
• focuses only on “bottom-of-funnel” (or “ready to buy”) lead acquisition, and
• assumes you’ll be using Google Ads search campaigns and their built-in bidding strategies.

It does not cover:

• ❌ creative (e.g. copy, visuals, landing pages, etc.)
• ❌ constructing offers
• ❌ conversion rate optimization
• ❌ the difference between bidding strategies
• ❌ campaign types other than Search
• ❌ micro-conversions and secondary conversions

This post is not a substitute for consulting with a qualified professional. The information is provided merely for convenience and educational purposes.

Finally, the content in this post may appear dense to some readers. For that reason, I’ve provided a “TLDR” (Too Long, Didn’t Read) section at the end with key takeaways for those who wish to skip the density.

Introduction

In my consultations, when I ask why a business is switching Google Ads vendors, the top three reasons are:

1. “lack of transparency,”
2. “lots of spam, not many leads,” and
3. “we’re burning cash.”

When I begin asking probing questions about the business, a few respond:

• “My previous vendor never asked me that…” and
• “why do you need to know that?”

I found myself explaining over-and-over again (particularly to smaller businesses) “why” I’m asking, so it felt appropriate to write a post.

At the end of the day, it helps both parties if your campaigns are profitable and come with helpful decision-making insights. And a little transparency and vulnerability is paramount to making this happen.

For a marketing vendor to spend your budget while ignoring critical pieces of information is a disservice to both of you.

Pro Tip: a professional Google Ads lead generation specialist will ask probing questions before spending a cent of your business’s money.

One last thing before we begin: we’ll assume that you have already seen your prospective vendor’s past work and you’re ready to engage with them in a consultation.

Moving on, here’s a (non-exhaustive) list of discussion points you should have with your prospective vendor before hiring them…

Have you run Google Ads before? What were the results like?

If you’ve run Google Ads campaigns before — either DIY or with a previous vendor — be sure to say so.

Your answer to this question will affect how quickly you’re “up and running.”

If your campaigns were well-managed, then it might shorten the “ramp up” time it takes to start generating qualified leads.

But businesses don’t typically seek out new vendors because “things are going well,” so if your campaigns weren’t well-managed, then the “ramp-up” period might take a little longer before “hitting stride.”

This is because of the way Google Ads works: it uses all of your old campaign data to train itself to deliver future results.

The data we’re talking about is called “conversion data,” and I discuss this further below.

Defining the primary conversion: who is your target and what do you want them to do?

Pro-Tip: If your vendor never brings up conversions, or looks confused when you ask, you should simply walk away.

What a conversion is

If you don’t know, a conversion in lead generation is what happens when:

• somebody you want…
• …does a thing that you want them to do…
• …to end up somewhere in your sales pipeline.

You and your vendor will first need to agree on what that “somebody” and “thing” are in order to define your “primary conversion” — or “what you want more of.”

We’ll continue to cover this further, but before we do, let’s be extra clear about what you don’t want…

What a conversion isn’t (or “bad” conversions)

Just to be extra clear, here’s what a conversion is not:

• Spam
• Accidental repeat form submissions
• Repeat phone calls
• Dropped calls
• Unqualified leads
• Duplicate leads

(These are examples of what we’ll call “bad” conversions, or simply “what you don’t want”)

And here’s why this matters…

How does your vendor stop “bad” conversions?

Don’t worry, you don’t need to know how it all works.

You just need to know this:

Google Ads needs to be *taught* what you want, so any “thing” that gets counted as a “conversion” is used to *teach* your campaigns to deliver more of that thing …using your money.

This means:

• If your vendor counts spam, you’re paying to get more spam.
• If they count unqualified leads, you’re paying to get more unqualified leads.
• If they count repeat forms and phone calls, at best you’re just feeding yourself misleading data.

So ask your vendor how they handle “bad” conversions, or else you’ll end up paying for more “bad” conversions.

With all of this in mind, let’s finish defining your primary conversion…

What should *your* primary conversion should be? It depends on your sales cycle.

To repeat myself: for lead generation, a “primary conversion” should be defined as “a form, message, or phone call made by a unique and qualified lead” at a minimum. Nothing less.

Again, that’s the minimum. But you can get more granular if it makes sense.

With Google Ads, you have a limited time from the moment someone clicks your ad to record a conversion. Your vendor can set this limit up to a maximum of 90 days.

To emphasize: The clock starts ticking the moment someone clicks your ad, not the moment they actually reach out to you.

As an example: Assume you have a 90-day limit. We’ll guess what’s “safe” (let’s say 60 days) and pick an action that happens within that window. This gives 30 days of “wiggle room” for a visitor to “kick the can down the road” if they need to before they reach out, and gives you 60 days to:

• qualify/disqualify them
• quote them
• close them

Based on your sales cycle, ask yourself “which of these three can I consistently complete within 60 days of outreach?” Those are your options to choose from.

Disclaimer before moving on: Bidding strategy (not covered in this post) also plays a major role into what you should choose here, so be sure to discuss with your vendor before making a choice.

Running the numbers: does a Google Ads campaign make sense *for you?*

As with anything else in business and finance, marketing is about taking calculated risks. The second best alternative to predicting the future with 100% accuracy (impossible) is to attempt to maximize “foresight” and minimize blind spots to the best of our ability.

As stated in the introduction, for a vendor to spend your marketing budget without addressing risk is a disservice to both of you. With that said, you and your vendor should be discussing and measuring risk using any data you have available to you.

How large is your profit margin?

This is probably the #1 discussion you and your vendor should be having right after they tell you their fees (because that will eat into your margins, too).

A brief example to illustrate the importance of discussing margins:

A marketer says they can “help you get $3 in sales for every $1 you spend on advertising.”

Good deal, right? Maybe. You won’t know until you account for your profit margins to find out what you’ll ultimately walk away with.

Here’s the quick math:

• $3 in sales for every $1 spent against 15% margins → $0.45 for every $1 spent, a 55% net loss.
• $3 in sales for every $1 spent against 40% margins → $1.20 for every $1 spent, a 20% net gain (profit).

The Math: (Gross Revenue ÷ Ad Spend) × Margin Percentage = what you ultimately walk away with

Generally, higher profit margin = higher chance of success… sometimes.

When I say “sometimes,” I mean we also need to account for demand (or lead volume)…

How much demand is there?

A high margin offer doesn’t matter if there’s nobody around to buy.

Likewise, a low margin offer could be a “home run” if demand is surging.

Here’s a simplified visual of the relationship:

This is typically where planning starts to get “blurry,” but there’s ways to reliably estimate how much demand exists before spending anything.

In no particular order (and often in combination with eachother):

1. Rely on your vendor to do “warm” research to get data. (Best if data is reliable)
   If you get sales from SEO already, your vendor can look through your Google Analytics data (if the data is clean and reliable) and Google Search Console data to estimate demand. If you’ve run Google Ads before (and again, if the data is clean and reliable), they can also look there.
2. Rely on your vendor to do “cold” research to get data. (Good)
   Google Ads provides a limited amount of historical information to rely on, but your vendor will have access to it. If you’ve run ads for the same offer before, your vendor can look at your own campaigns’ historical data to help account for this as well.
3. Use your own data as a “rough” estimate. (Hit-or-Miss)
   For example, a landscaping company may be able to estimate how high demand is for one of their seasonal services simply by looking at what the numbers were like at the same time last year.

After this, you and your vendor will move on to finding out how much spend is involved.

How much *can you afford* to spend?

The real question we’re answering is “what is the most you can afford to spend to close one sale?“

To answer this question, your vendor should be asking you for the following:

• your sales closing rate
• what your average customer is worth (gross) over their lifetime spending with you
• your profit margin

This stuff varies often, but the more accurate you can be, the better. You and your vendor can use these to figure out the maximum you should be spending for one closed sale in order to break even.

Let’s use an example:

• Sales closing rate: 30%
• Average Gross Lifetime Value of One Customer: $5000
• Profit Margin: 40%

($5000 × 40%) ÷ (1 ÷ 30%) = $600 is the maximum you can afford to spend in order to close one new $5000 customer without losing money.

The Math: (Average Gross Lifetime Value of One Customer × Profit Margin) ÷ (1 ÷ Closing Rate Percentage) = Maximum you should spend to close one new customer

Great. We know how much you can afford to spend. Next, you’ll want to know how much you need to spend…

How much do you *need* to spend?

In the previous example, $600 was the maximum you could afford to spend to close one new $5000 customer without losing money.

This means that if your competitors are consistently spending more than $600 for the same customer, your success might be an uphill battle.

Advertising is just an auction, and you’re bidding against competitors for a place on your market’s screen. Highest bidder wins.

Luckily, getting a rough estimate of what the competition is bidding isn’t impossible.

Your vendor will usually be able to give you an estimate using data directly from Google. It’s limited, but it’s in the ballpark enough to make sound decisions.

Pro-Tip #1: Google Ads offers “future forecast” tools that claim to be able to “predict” what you’ll get from your spend, but these tend to be wildly inaccurate. So it’s best to avoid these “forecasts.”

Pro Tip #2: An experienced Google Ads vendor will likely use the raw data from Google to forecast your required spend on their own, and ultimately figure out if running a campaign is likely to fit your budget and risk tolerance.

When should you expect results?

Your vendor should be clear about this: you’ll start getting some traffic immediately. But that doesn’t mean “smooth sailing” immediately.

Google Ads campaigns don’t start “optimized” — there’s a learning phase where Google gathers data before performance stabilizes.

The first phase of a campaign is usually spent *paying for data.* We’ll call this phase the “training phase.” The first few conversions you get during this period are typically sheer “luck.”

Like many other things, how long this phase lasts depends on:

• how long your sales cycle is,
• how “tightly” defined your primary conversion is,
• how competitively you’re bidding, and
• other things like targeting and how compelling your offer and messaging are.

Because of this, it’s best not to think of the length of the training phase in terms of “X number of weeks,” but rather “X number of conversions.”

This phase begins the moment your vendor submits the first conversion. With each additional conversion, your campaign becomes less-and-less “lucky” and more-and-more “dialed in.”

About 15-30 conversions later, the “optimization phase” begins. Your vendor should now be able to start making small changes to your ads, landing pages, and budget over time in order to optimize for better quality leads while striving to keep costs minimal.

Conclusion

If you made it this far without skipping anything, kudos to you. This post barely even scratches the surface of what to discuss with your prospective Google Ads vendor before hiring them, so stay tuned for Part Two of this series at a later date.

Key Takeaways (Too Long, Didn’t Read)

✅ A professional Google Ads vendor asks the right questions before spending your budget. If they don’t ask about your past ad performance, profit margins, demand, sales closing rate, and customer lifetime value (LTV), that’s a red flag.

✅ Not all conversions are good conversions. If spam, duplicates, and unqualified leads are counted as conversions, Google Ads will optimize to generate more of them. Your vendor should use lead management software to filter out bad data.

✅ Google Ads needs to be taught what you want. Any action counted as a conversion tells Google’s algorithm to deliver more of it. If spam and unqualified leads are tracked as conversions, you’ll pay for more of the same.

✅ Avoid Google Search Partners & Display Network for lead generation. These placements are notorious for generating spam and low-quality leads. A competent vendor will opt out unless they have a solid reason not to use them.

✅ Your past ad performance affects ramp-up time. If previous campaigns were poorly managed, expect a longer training period before results stabilize. If past campaigns were strong, ramp-up may be shorter.

✅ Your primary conversion should be well-defined and aligned with your sales cycle. At a minimum, a conversion should be a “form, message, or phone call made by a unique and qualified lead.” If your sales cycle is long, you may need to track conversions earlier in the process (e.g., qualified lead or quote request).

✅ Profit margin dictates success. A “$3 in revenue for every $1 spent” claim is meaningless without knowing your margins. Example:

• 15% margin → $0.45 for every $1 spent (a loss).
• 40% margin → $1.20 for every $1 spent (a profit).

✅ Demand must be estimated before launching. Even with high margins, an ad campaign won’t succeed without enough market demand. Your vendor should assess demand using past data, competitor research, and Google Ads tools before spending your budget.

✅ Know how much you can afford to spend vs. how much you need to spend.

• Max cost per lead = The highest amount you can afford to pay for a closed deal without losing money.
• Required spend = What competitors are bidding, which determines if your budget is realistic.

✅ Google Ads campaigns don’t start optimized.

• Phase 1: Training (Paying for Data). Google Ads gathers data, and early conversions are often lucky. Expect some inefficiencies.
• Phase 2: Optimization. After 15-30 conversions, your vendor can refine targeting and improve lead quality while controlling costs.

🚩 Bottom line: If a vendor isn’t discussing profit margins, conversion accuracy, demand, competitive bidding, sales cycles, and long-term strategy, they may end up gambling with your ad budget.