Excerpt from: Don't Waste Money on Google Adwords
The goals you set for Google AdWords are specific to your own business and advertising objectives. Common goals people set for Google AdWords include increasing website traffic, increasing sales, or increasing other conversions like email sign-ups, service inquiries, downloads or subscriptions. It’s important that you set your goals in line with industry baselines and maintain a clear measure of success.
You’re starting a Google AdWords campaign and you want to know what realistic goals you can achieve. First of all, you need to establish some measure of success, such as a sales target, number of new leads, increased website visitors, or number of downloads or subscriptions. Next, you need to set a Google advertising budget and project what returns on investment (ROI) you can achieve with that budget.
If you choose the pay per click model in Google AdWords, this means you pay each time someone clicks your Google ad. You’ll need to project how many clicks will translate into a conversion on your website (sale, subscription, etc.). This depends largely on the effectiveness of your ad campaign and your website, but you can find baseline conversion rates for your industry. The standard conversion rate is 1%, but the normal conversion rates in your industry may be higher or lower depending on your product or service. Once you project a conversion rate, you can calculate how much it will cost you to achieve one conversion, from which you can establish a target return on investment against which you can measure your actual performance.
To learn more about how to set and achieve your goals with Google AdWords, read Don't Waste Money on Google AdWords.