The time of relying solely on individual conversions is long gone. The adoption and exploitation of conversion values are now encouraged across all ad platforms. Consider Google Ads as an example: One of the few available bidding choices for PMax campaigns is maxed conversion value, which has been receiving a lot of positive feedback from account referrals.
If you work in e-commerce, you are familiar with the concept of conversion value because successful marketing efforts revolve around revenue tracking. However, you might find it difficult to determine a conversion value if you work in a service-related field or one where there isn’t a predetermined rate for each encounter.
We’ll get into how to do it in this piece. We’ll talk about the following:
specific conversions’ variance from conversion values
advantages of focusing on conversion values.
how to calculate a conversion factor.
It should be noted that although this essay will concentrate mostly on how Google uses conversion values, the lessons learnt can be applied to other channels.
What distinguishes conversions from conversion values?
Any activity that you ask an advertising platform to track is a conversion. Conversion actions can range from those that are necessary for making a profit (such as downloading a guide or placing a call) to the actual sale.
setup of google advertising conversion actions
The money you instruct the advertising platform to associate with the finished action is known as the conversion value.
I might, for instance, configure a conversion action to monitor all phone calls resulting from my Google Ads advertisements. As long as I set the action to be a primary action, Google will track each of them. Adding the conversion value into the action will determine whether it values the calls at $1, $100, or any other sum.
What justifies setting conversion values for non-eCommerce companies?
CPA is one of the main sources of false positives and negatives in PPC reporting (cost per acquisition). While having a low CPA is beneficial, organizations frequently obsess over lowering it to the absolute minimum without considering the worth of the leads they are generating.
A more useful PPC indicator than CPA for determining whether your ad campaigns are providing actual value is ROAS (return on ad spend).
Cost per action against return on ad investment
Conversion values advance the discussion and make the real return on your advertising investment transparent. Setting conversion values enables Google Ads to better understand which activities are most valuable to you and where to allocate funding.
Additionally, taking conversion values into account will assist Google in developing more accurate projections of the potential returns on additional investment. This is especially helpful if your campaigns are running out of money but are generating low-quality leads. Google can target your ideal prospects more intelligently by adding conversion values.
How to determine conversion rates if you’re not in the e-commerce business
We shouldn’t assume conversion values are simple just because we’re used to utilizing them. Your conversion values will be based on models and data-backed best assumptions unless you’re in a transactional business like e-commerce.
Comparing phone leads to form fills to chats is a pretty helpful place to start.
Phone leads might be your greatest lead type if your sales team is best served by in-person encounters.
You might appreciate your form fills or chats more if it’s best served by a lot of prospect information (perhaps obtained through some content, a form, or another technique).
Whichever is most helpful, here’s what you should do:
Determine your baseline value as 10% of your gross profit from the typical engagement (you can alter this as you run your business and witness actual conversions).
To calculate the conversion value, use the conversion rates for each category of lead.
For illustration, suppose I’m an attorney with an average case value of $6500 and phone leads convert at a rate of 50% while form fills only convert at 20%.
The baseline value per lead is $6,500 x 0.10, which is $650.
The value of a phone lead is $650 multiplied by 0.50 to get $325. The conversion value of the form: $650 x 0.20 = $130
Don’t forget to take location into account. It may be more difficult or simpler to service some locations than others. You might choose to place a higher or lower value on leads from particular areas if the location of a customer affects your margins or if you have knowledge about customer retention in those markets. This can be accomplished by altering bids and eliminating areas from high-value ads with aggressive ROAS targets.
Know the value of your conversions.
Conversion values are not required, but if used properly, they will enhance account performance. Examine your lead sources carefully to determine where your best leads are coming from. You will help Google offer you the top prospects and have the best potential for ROI by pricing them higher than the typical lead.
