SEM Campaign Optimization and ROI 2 — Questions and Answers
Question 1: A campaign has a Cost Per Acquisition (CPA) of $80 and a customer lifetime value (LTV) of $400. What is the LTV:CPA ratio, and is this campaign profitable?
- 5:1, profitable (Correct answer)
- 0.2:1, not profitable
- 2:1, marginally profitable
- 10:1, extremely profitable
Correct answer: 5:1, profitable
LTV:CPA = $400/$80 = 5:1, which is generally considered highly profitable since revenue far exceeds acquisition cost.
Question 2: Which optimization lever should you adjust first when your Search Impression Share is high but conversion rate is low?
- Ad copy and landing page relevance (Correct answer)
- Increase daily budget
- Broaden keyword match types
- Raise target CPA bids
Correct answer: Ad copy and landing page relevance
High impression share with low CVR indicates the ad is being seen but not compelling users to convert, so improving ad copy and landing page alignment is the priority.
Question 3: What does a Quality Score of 3/10 on a high-spend keyword most likely indicate?
- Poor expected CTR, ad relevance, or landing page experience (Correct answer)
- The keyword is too competitive
- The bid is too low for the auction
- The campaign budget is insufficient
Correct answer: Poor expected CTR, ad relevance, or landing page experience
Quality Score reflects three factors—expected CTR, ad relevance, and landing page experience—and a score of 3/10 signals weakness in one or more of these areas.
Question 4: An advertiser runs the same ad for 6 months without changes. Which optimization practice is being neglected?
- Ad rotation and creative refresh (Correct answer)
- Negative keyword mining
- Bid adjustments by device
- Conversion tracking setup
Correct answer: Ad rotation and creative refresh
Ad fatigue sets in over time; regular creative refresh and A/B testing new ad variations is a core ongoing optimization practice.
Question 5: Your ROAS target is 400%. If your average order value is $150, what is the maximum CPA you can afford?
- $37.50 (Correct answer)
- $60.00
- $150.00
- $600.00
Correct answer: $37.50
Max CPA = Average Order Value / ROAS target = $150 / 4 = $37.50.
Question 6: Which Google Ads report is most useful for identifying search terms that are wasting budget on irrelevant clicks?
- Search Terms report (Correct answer)
- Auction Insights report
- Keyword Planner report
- Ad Schedule report
Correct answer: Search Terms report
The Search Terms report shows the actual queries that triggered your ads, allowing you to find and exclude irrelevant terms as negatives.
Question 7: A campaign's click-through rate drops after a competitor enters the auction. Which metric from Auction Insights would confirm this cause?
- Impression Share and Overlap Rate (Correct answer)
- Quality Score and Ad Rank
- Average CPC and conversion rate
- Impression frequency and reach
Correct answer: Impression Share and Overlap Rate
Auction Insights' Impression Share and Overlap Rate reveal how often competitors appear alongside or ahead of your ads, confirming increased competitive pressure.
SEM Campaign Optimization and ROI 2
A campaign has a Cost Per Acquisition (CPA) of $80 and a customer lifetime value (LTV) of $400.
What is the LTV:CPA ratio, and is this campaign profitable?