How to calculate cost per conversion for PPC?

by spartanic 4 replies
Adwords seems a bit unreliable with their cost per conversion data since sometimes my conversions go unrecorded. I've used Tracking202 to track my conversions and so far its recorded just about all of them successfully. However they don't seem to automatically calculate the cost per conversion for you.

How would I calculate this myself?
#search engine optimization #calculate #conversion #cost #ppc
  • Profile picture of the author dburk
    Hi spartanic,

    Are you simply asking for the mathamatical formula? If so it is:
    (Ad Spend / Number of conversion) = Cost per Conversion

    I believe the tracking202 software uses a different, even more useful metric: EPC (Earnings Per Click). Ideally you want to measure EPC down to the individual keyword level. I like to take it even further and track the keyword/ad-text/landing-page combination which varies during testing.
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  • Here are some calculation that might be of use to you and perhaps others who are new to CPA etc.

    Divide the click price into the budget you have. And that will give you
    the number of visitors for that money.

    eg. $0.50 into $1000 = 50 / 1000 = 2000 (visitors)

    Also to get the visitor value this is the calulation:

    1. You sell a product for $20
    2. You sell 43 products from the 2000 people who visit your site and buy.
    3. You can now calulate the visitor value

    eg. 43 (products sold) x $20 = $860 Then...
    divide the $860 by 2000 (visitors to your website) = $0.43 (visitor value)

    So in essence every one who visits your website is worth $0.43 to you.
    Now the trick is to increase that figure but still spending the same amount of
    money or less.

    If you could increase that from $0.43 to lets say $0.70 you'd be selling more product
    because your conversation rate is better with the same amount of traffic.

    As you know it could be a number of things you could do, look at the landing page's
    headline, giveaways, better keywords, where you focus on for SEO etc etc

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    • Profile picture of the author Lucid
      > I like to take it even further and track the keyword/ad-text/landing-page combination which varies during testing

      And that's exactly what you should be doing. By the keyword, we also mean down to the keyword match type (broad, phrase, exact) which I don't believe tools like Prosper202 and Tracking202 can do, must less down to the ad level. But since I have very little experience with these tools, someone correct me if I'm wrong.

      Obviously the best is to use Adwords' own conversion tracking. The reason it may not catch all conversions is because the cookie is good for 30 days. Also keep in mind that the conversion will be recorded for the day the click occurred which may be different than the day of the conversion itself.
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  • Profile picture of the author taufandilog
    thanks...I really confuse about conversion before. Now, I know the detail. Thanks
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