Conversion Value Setup For Search Campaigns

Full-Coverage Conversion Value Modeling

Whether a search campaign is for lead generation or eCommerce, each type of conversion needs to be assigned a value.

Here, we are focused on lead generation campaigns, which include the majority of search campaigns. For example, advertising a service business where leads (sales inquiries) are handled by a sales organization. We have a separate article about this topic for e-commerce search campaigns.

Why assign PPC Conversions a value?

By assigning a conversion value, we are able to measure the two most important metrics for a search campaign: ‘return on ad spend’, and ‘advertising margin’. Even more importantly, we are able to inform the automated bidding system in relative terms how valuable a conversion is. So the automated bidding will be more aggressive in bidding for more valuable conversions.

PPC Conversion Values in e-Commerce campaign

eCommerce campaign conversion value is straightforward: the amount of the sale minus the product cost. So for example if we know the gross margin for a product line, it’s simple to approximate.

PPC Conversion Modeling in Lead Generation Campaigns

This is best explained by example.  Suppose a regulatory consulting firm obtains new clients after form fills and phone calls.  60% of incoming client phone calls have resulted in a contract over 2 years. Looking over their financials, they see those calls generated revenue with an average project value of $15,000.

In this case, we would calculate the conversion value of a phone lead as 0.7 * 15,000 = $10,500.

For a consultancy, the average project might range from $10,000 to $500,000 or even higher from a single phone call.  The numbers are impressive but they’re all over the place. Larger values with more variance distribution require a bit more consideration in order to arrive at a meaningful number.

The conversion value doesn’t have to be exact, it will serve it’s purpose if within +/- 25%.

Benefits of creating a conversion model

First, reporting so we know the campaign profitability metrics.

Second, to feed conversion metadata (conversion value) back into the automated bidding.

Third – higher performance campaigns!

Issues with Conversion Value Modeling

eCommerce businesses are the most straightforward in which to establish a conversion value. The majority of search campaigns are lead generation campaigns, so the value of each client acquisition must be made from a sample of project revenue over a longer planning window.

Related Posts

5 Keys To Developing High Performance Search Ad Campaigns

5 Keys To Developing High-Performance Search Ad Campaigns

Steve discusses 6 things to consider when deploying an eCommerce Shopping Campaign starting with “Smart Shopping” Campaigns vs. Standard Shopping Campaign

Read More →
search ad conversion tracking

PPC Call Tracking Benefits

PPC call tracking facilitates the capture of search engine metadata associated with call conversions. This metadata becomes powerful information when it is used as the fuel for automated bidding or “machine learning” algorithms within a PPC platform.

Read More →
8 Ingredients For High Performance Search Ad Campaigns

8 Ingredients For High Performance Search Ad Campaigns

8 Ingredients For High Performance Search Ad CampaignsSteve details 8 ingredients that should be present when developing high-performance search ad campaigns: a product marketing perspective; a strong keyword base, volume and CPC filtering; a semantically-based…

Read More →