Digital Marketing Metrics Concept

Why Conversion Value Is the Most Important Number You Can Feed Into Google Ads

Google Ads is a numbers game. And aside from Google’s secret sauce known as the “algorithm,” the more numbers that Google Ads has, the better it performs. That’s how algorithms work. You’ve heard of the CTR, CPC, search impression share, cost per conversion, conversion rate, and impression share lost due to budget.

But there’s one number that is often overlooked in Google Ads. The key to making it work is to input the most accurate number to give you the best sense of your marketing efforts.

Welcome to our guide about the conversion value in Google Ads.

What Is the Conversion Value in Google Ads?

The conversion value in Google Ads allows you to measure your return on investment (or return on ad spend, ROAS) based on how much a conversion is worth with your paid advertisements.

The Conversion Value for E-Commerce Is Fairly Easy to Measure

Let’s say you own a boutique, and you’re running ads for your summer dresses that cost $100. Your conversion value is very straightforward because of the tracking you can add to your carts. The value per conversion is $100. 

Your actual profit might differ from $100, but you can easily measure that with your accounting software.

The Conversion Value for B2B or Non-Ecomm Sites Is a Bit Harder

For non-e-commerce sites, the conversion value gets trickier, but it’s still doable.  

In this example, we’ll use a moving company. The business runs separate campaigns and ad groups, but different sizes of moves have different values. Among all the different types of moves, from local and long-distance to studio apartments and three-bedroom houses, the average move is worth $1,500. 

Even with campaigns extremely segmented into each type of move, not every call or form filled to the moving company will end in a sale. Calls and form fills are easy metrics to track (and you can listen to call recordings in Google Ads for up to 30 days). However, Google cannot track (at least not yet, looking at you, AI) how the moving company’s sales staff or project managers handle the calls they receive.

This scenario is where the business owner needs to be on top of their game. They’ll need to determine how many conversions from the ads turn into actual sales. An average move is worth $1,500. But if the company gets one sale out of five conversions, the value per conversion in Google Ads becomes $300 ($1,500 divided by five).

If you want some help calculating your conversion value, Google Ads has this handy tool. We cannot emphasize enough that the more accurate your numbers are, the better the metrics reporting on the Google Ads side will be.

Conversion Value Per Cost in Google Ads

The subsequent metric you can pay attention to for your Google Ads is the conversion value per cost. It arrives at this metric by dividing your total conversion value over a given timeframe by the total ad interactions. It gives you a number that is essentially the return on ad spend. 

Back to the e-commerce site selling summer dresses for $100. Let’s say for an entire month, the boutique has 50 interactions with the ads at $1.80 per interaction. Out of those interactions, there are two sales for a 4% conversion rate, which is outstanding for e-commerce.

The total spend for two conversions is $90, and the boutique sold $200 worth of dresses. The conversion value per cost is 2.2, which means the boutique owner is getting slightly higher than twice the return on investment.

You can also set your conversions to give different values to various devices, such as a conversion from a mobile app worth half of the same conversion on a desktop. 

Conversion Value Per Cost Optimizes the Target Return on Ad Spend

It’s great that you now know the value of your conversions on Google Ads. But there is one final piece of the puzzle you can feed to Google Ads that will make your campaigns even better.

Google uses smart bidding to maximize conversions or maximize conversion values for your ads. You can tell Google to run the ads to maximize your conversion rate to try to get the highest ROI, something it calls the target return on ad spend (tROAS).

Once Google knows this, the algorithm goes to work. You should start to see your campaigns getting more effective, and your return on ad spend getting more efficient.

The one caveat is that Google recommends doubling your daily budget on the ad spend and waiting six weeks for the new values to take hold. Again, that’s because Google’s algorithm needs more numbers (including money) to feed the algorithm. After this point, you should be able to hone your campaigns to really get them clicking in the way you need them to.

Talk to Us About Optimizing Your Google Ads

Of course, there’s more to it than simply throwing numbers at Google. You have to input the right numbers. That’s where marketing expertise comes into play. Contact us or call (417) 799-2233 to consult. We’d be happy to guide your digital advertising.

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