Transition from Cost-Per-Conversion to AdWords Metrics 2.0

July 29, 2013 § Leave a comment

cost per conversion

cost per conversion

AdWords advertisements include the use of certain metrics. Some of the most commonly used metrics by the AdWords advertisers are – Value per conversion, Cost per conversion, Conversions and CTR. By employing these metrics, you can find ads that fetch you huge traffic consisting of a large number of conversions. You can also find these ads at the minimum price, while fetching you a high level of overall revenue. Cost per conversion metric suffers from certain disadvantages, which make it ineligible t be used in certain applications. This article discusses as to why you should discontinue the use of Cost per conversion and go for AdWords metrics 2.0.

Lately, the best practices in AdWords are no longer applicable, owing to the changes made by Google and its addition of new features to AdWords. This calls for some changes in the metrics for convenience of use.

Demerits of Cost per Conversion:

The importance of Cost per conversion is far lesser than Conversion Value/Cost. Cost per conversion does not need you to have a set goal. Rather than having a goal set, it is more important that with each scale, you are having a specific margin amount. For a specific keyword, if you find the conversion value to be quite high, then you will be capable of having a higher cost per conversion, as compared to other keywords having lower value of conversion.

A good example is the companies selling wallets, luggage, backpacks and other such items. The company sells a wallet at a low cost of about $10 – $20. In order to have a ratio of revenue-to –cost as 5-1, the coat per conversion that you need to have will be around $2-$4.

However, the cost shows a good amount of rise in case of the sale of suitcases. In this case, the average sale is in the rage of $100-$200, even when the cheapest suitcases are sold. You still need to have a ratio of 5-1. So, you can opt to go for a cost of conversion of about $20-$40, which is about 10 times greater than your previous one.

Sometimes, the sales of luggage are much higher, as families mostly purchase suitcases for each and every member of the family at the same time. This may cause the order to reach about $500. In such a case, you can afford paying a high amount as cost per conversion.

Conversion value/cost allows you for setting precise, on the spot bids, which do not need any further spreadsheets, integrations or calculations. This metric is quite efficient when you use adwords scripts for managing your bid.

AdWords management:

You can enable the metric of conversion value/cost, in your campaign of AdWords. By enabling this metric in your account, you will be gaining a huge knowledge about the way of setting your bidding.

A number of new advertisers are afraid of the aspect of bid management in AdWords management. Implementation of this metric would make the aspect of bid management easier to them.

Conclusion:

Thus, rather than using cost per conversion, it is better to go for the AdWords metrics 2.0. The bid management becomes a really easy task by doing such. 

Summary: Cost per conversion has several disadvantages. Adwords metrics 2.0 offer many benefits for bid management to the advertisers.

Post By
The Post written by Vishal Shah a professional developer for web development company who has expertise in Custom mobile application Development and iphone application development

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