Optimizing for Greater Conversions

Introduction to Optimizing for Greater Conversions

Overview of Conversions and their Impact

In online advertising, a conversion occurs when a click on your ad leads directly to user behavior you deem valuable, such as a purchase, signup, page view, or lead. With conversion data, you can make smarter online advertising decisions, particularly about what ads and keywords you invest in, and you can better measure your overall return on investement (ROI) for your AdWords campaigns.

The Conversion Optimizer helps streamline bidding for conversions at a lower cost by optimizing your placement in the ad auction to make sure you get low-converting clicks only if they are cheap while still getting you as many high-converting clicks as profitable. Evaluating and optimizing for conversions is key to helping you identify the effectiveness of your AdWords ads and keywords.

Key Metrics for Tracking and Improving Conversions

To better track and improve conversions, it's useful to familiarize yourself with the following key metrics:

• maximum cost-per-acquisition (CPA): the most you're willing to pay for each conversion (such as a purchase or signup)
• average cost-per-acquisition (CPA): the average cost for each conversion
• recommended maximum cost-per-acquisition (CPA) bid: the average of the keyword bids, weighted by the number of conversions for each keyword
• return on investment (ROI): the ratio of the cost of advertising relative to the profit generated from conversions
• daily conversions: daily number of clicks on your ads that lead directly to user behavior you deem valuable (such as a purchase or signup)

Using Conversion Optimizer with Conversion Tracking

Overview of Conversion Optimizer

The Conversion Optimizer is an AdWords feature that uses your AdWords Conversion Tracking data to get you more conversions at a lower cost. It optimizes your placement in each ad auction to avoid unprofitable clicks and gets you as many profitable clicks as possible.

How it works:
With the Conversion Optimizer, you bid using a maximum cost-per-acquisition (CPA), which is the most you're willing to pay for each conversion (such as a purchase or signup). Using historical information about your campaign, the Conversion Optimizer automatically finds the optimal equivalent cost-per-click (CPC) bid for your ad each time it's eligible to appear. You still pay per click, but you no longer need to adjust your bids manually to reach your CPA goals and can benefit from improved return on investment (ROI). To calculate the optimal equivalent CPC bid, the Conversion Optimizer first calculates a predicted conversion rate for each auction, taking into account your ad's conversion history, the keyword's broad match query, the user's location, and the conversion rates of Google's search and Display Network partner sites. The feature then generates an ad rank by combining your CPA bid, quality score and predicted conversion rate.

The recommended maximum CPA bid is the ad group bid we suggest in order to keep your costs stable when you change from manual bidding to the Conversion Optimizer. The recommended bid is directly based on your current CPC bids and conversion rates over time. For example, if you have one ad group with two keywords, the Conversion Optimizer divides the current maximum CPC bid by the conversion rate to get a maximum CPA bid for each keyword. With the maximum CPA bid for each keyword, the Conversion Optimizer can compute the recommended maximum CPA bid for the campaign (the average of the keyword bids, weighted by the number of conversions for each keyword).

Improving your performance:
Many advertisers using Conversion Optimizer have achieved double-digit percentage increases in conversions, while paying the same price or less for each conversion.