Full-Coverage Conversion Value Modeling

When configuring a new lead generation campaign, or re-engineering an existing lead generation campaign, conversion value models are generated for each campaign.

We have a separate article pending on this topic for e-commerce campaigns. Here, we are focused on lead generation campaigns. For example, selling a product where leads (sales inquiries) come in and are engaged by a sales organization.

  • What assign PPC Conversions a value?

    By assigning a conversion value, we are able to tell the automated bidding system to work harder to obtain more valuable conversions. Also, we are able to measure average return on ad spend, and net advertising margin.

  • 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 Salesforce.com consultancy, the average projects 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.