Why Conversion Tracking Is Not Enough to Measure Google AdWords Performance

/Why Conversion Tracking Is Not Enough to Measure Google AdWords Performance

With Google AdWords, the “numbers don’t lie,” but they don’t always tell the whole truth either.

That may sound strange considering one of the main benefits of digital advertising is all the tracking data available.  However, conversion tracking, or quantitative data, only tells half of the story and is not enough to measure Google AdWords performance.

What’s the other half of the advertising story?

The answer is…

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Qualitative Data

You see, conversion tracking simply tells us how many leads or sales were generated from your AdWords campaigns.  But it tells us nothing about the quality of the leads and sales!

If you have experience advertising, then you know all leads and sales are not created equal.  In other words, just because your ads are converting, doesn’t mean those conversions are from your ideal customers.

That brings us to an important law of advertising…

The Value of Conversions Is Directly Proportional to the Quality of Conversions

That may sound obvious, but many advertisers fail to factor this into their analysis of campaign performance.

Again, conversion tracking tells us nothing about the quality of a conversion.  All we see are the cold, hard numbers.  That leads us to make decisions based on number of conversions and cost per conversion, but we are missing a critical variable.

To truly understand AdWords performance we must know the number of “quality” conversions and the cost per “quality” conversion.  That small shift can make a huge impact on profitability.

Let’s look at an example…

 

Which Campaign Is Performing the Best?

Let’s say you’re running two campaigns and one has generated 5 webform conversions, which are prospects requesting consultations.  The total cost is $500 so the cost per conversion in this campaign is $100.

The other campaign has generated 10 webform conversions with the same ad spend so the cost per conversion is only $50.

Clearly the 2nd campaign is performing best right?

Well, the correct answer is maybe…

Remember, it depends on the quality of those conversions!  If upon further analysis the first campaign generated 4 qualified leads (quality conversions) and 1 unqualified lead (low quality conversion), then the cost per “quality” conversion is $125.

Then let’s say the 2nd campaign only generated 2 qualified leads and the other 8 were unqualified.  That means the 2nd campaign’s cost per “quality” conversion is $250.

Now it’s clear the 1st campaign is actually out-performing the 2nd campaign!

Makes sense, but there’s still one question left…

 

How Do You Get Qualitative Data?

I’ll give you a hint – it’s not in Google AdWords or any other ad network.

To get qualitative data, you need to step outside of your ad platform and either talk directly to your leads and customers or get that feedback from your team.

If you’re using a customer relationship management (CRM) tool like Salesforce or Infusionsoft, then you can add qualitative data like lead scoring to the leads generated from your ad campaigns.  Then over time you’ll be able to generate reports to see how many “quality” conversions you’re really generating from your ads.

Finally, once you’ve determined the number of “quality” conversions, then calculate the cost per “quality” conversion to make better decisions about your campaigns.

 

Need Help Improving Your Google AdWords Performance?

If you need additional help, then click here to learn more about our AdWords setup and optimization services.  We can help not only drive more conversions, but more importantly, drive “quality” conversions.

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By | 2017-11-12T10:18:53+00:00 February 11th, 2016|Categories: Pay Per Click Advertising|Tags: , |

2 Comments

  1. Quentin February 15, 2016 at 4:16 am - Reply

    Interesting but I see one problem, in your example you stop at “webform conversion” that’s just one part of the adwords conversion…the majority of people are not interested in webform conversion but rather in “sales” conversion that brings a tangible value.
    You should precise it in your title because it’s a bit misleading.

    • Phil Frost February 16, 2016 at 3:59 pm - Reply

      Hi Quentin – For many businesses, tracking “sales” conversions using AdWords conversion tracking alone is not always easy or even possible. This article was intended for that audience.

      However, even 100% e-commerce businesses need to take into account two types of conversions. 1. the initial transaction value and 2. the lifetime value from additional sales. For example, one campaign may generate more initial sales and look like the clear winner, but those customers might have less lifetime value than another campaign.

      The key takeaway is that you need to look beyond the initial conversion numbers and take into account qualitative data and/or lifetime value data that will not be in the AdWords reports.

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