One of the most important key performance indicators in any marketing strategy is the Conversion Rate. If you want to be able to determine whether your ad campaigns are doing well for your business, you should take your PPC Marketing‘s conversion rate into consideration. How can it help you? Let’s take a closer look.
PPC Conversion Rate Defined
Conversion rate is equivalent to the conversion count divided by the click count. It is typically in percent form. So let’s say you have a conversion rate of 3%, that means you get three conversions for every 100 clicks. This rate is an indication of whether or not your ads are performing towards your goals.
A conversion can be of any type: a newsletter subscription, an email address, a filled out form, a purchase and many more. It is called a conversion because it indicates a click that has been converted to a lead. Conversion rate helps you determine whether the ads and keywords you have are backing out for your business instead of just accumulating clicks that have no use for you.
How to Use Conversion Rate
Conversion rate data should not be used alone; it should always be paired with another data in order to appropriately determine whether a goal has been achieved. Here are Conversion Rate pairing comparisons that you can use:
1. Conversion Rate with Click-thru Rate
Each ad you run will generate a unique click-thru rate and conversion rate once it receives clicks. A high click-thru rate means the ad is effective enough to entice your would-be customers to click and proceed to your landing page.
How do you know if these clicks are directed towards your goals? If the ad has an equally high conversion rate, then that means your ad is working awesomely. But if you get a dismal conversion rate for the same ad, then that might mean that the customers were thinking of something else when clicking your ad.
Your ad might have a different message than your intention; hence you are not getting the result you want. It can also mean that your landing page is not appropriate for the ad. Conversion rate is an indicator of whether your ad copy is aligned to your landing page. In any case, an adjustment with your Search Engine Marketing campaign is essential if you want to get your money’s worth.
2. Conversion Rate with Cost per Lead
If conversion rate tells us how high or how low the conversions we get per ad, the Cost per Lead tells us how much we spend to get one conversion. Knowing the proportion of these two determinants will help us know what step to take next. Sometimes conversion rate can be high, but the cost per lead may be high too. It means you are sending the right message to your customers, but the keywords you use have high CPC.
If that is the case, it means you have to increase your quality score in order to get a lower cost per click. Or you can add more keywords or edit the ones you have to achieve a lower CPC. Once your cost per click is reduced, the cost per lead will be reduced too. You will then receive the full advantage of having a high conversion rate.
Understanding Your PPC Performance Metrics
Knowing how to interpret your conversion rate is essential in the success of your Search Engine Marketing campaigns. With this key performance indicator, you won’t lose out on possible conversions and you can limit spending on non-converting clicks. If you have no idea how to use these data for your benefit, it’s time to get a professional PPC Advertising agency to help you.