Google AdWords is a worthwhile cost if it provides a good return on investment. Otherwise, why waste the money?

The most important measure of ROI is revenue. The revenue may be in the form of advertising impressions if the ads are sold on a cost per thousand basis, cost per click if a network such as AdSense is used, conversions with an affiliate marketing program, etc.

Anyone using a combination of Google AdWords, AdSense and Analytics will find that tracking ROI can be done in several simple ways. It starts with making sure that the accounts are linked together so Analytics displays AdSense results for every page, section, referrer and other site activity.

Go to Analytics and click Traffic Sources and Campaigns. Then click on the "AdSense Revenue" tab toward the right side of the page. Copy the total revenue for the campaign for the designated time period.

Now go to AdWords and look up the cost of that campaign for the same period. Divide the revenue by the cost minus 1.

For example, if the revenue is $1,000 and the cost is $750, the return on investment is 33 percent or 1,000 / 500 - 1.

Flipping those numbers around provides a "cost of sale." In the example above, the cost of sale would be 75 percent or $750 / $1,000.

What is a good return on investment?

Some webmasters say their goal is a 100 percent ROI or $1,000 in revenue for every $500 in AdWords cost.

Experience shows that such a goal is achieveable. But it takes ongoing optimization and continual learning and improvement to get there.