PPC and The Importance Of Conversion Tracking
Whilst it may seem fundamental to some, conversion tracking is such a vital tool to Pay Per Click advertising that many people seem to overlook. Whether that's through lack of knowledge on what it does or lack of knowledge of how to implement it, is up to debate but conversion tracking is an integral part of a successful advertising campaign.
So why is it so vital to get this setup and running correctly? Effective PPC campaigns revolve entirely around return on investment (ROI). It is essential to know how much your average cost per click (CPC) is, how much your monthly budget is, how much your cost per action (CPA) is and how much that action is worth to the company. With each of these figures in place you can study the results of a campaign and can see whether it is providing a positive ROI. If you don't have even one of these figures then it can be impossible or at least very tricky to understand how the PPC campaign is performing.
Conversion tracking provides the CPA data needed for the calculation above. It can be setup to provide results of whatever action you would like but most commonly is setup to log a sale or a lead to the company via a contact us form. Now lets say for example you are a small e-commerce company selling coffee mugs and have setup a campaign with a budget of £1000 per month. Without conversion tracking then you may see an increase in sales and feel that it justifies the £1000 per month advertising. With conversion tracking setup it could show up that in fact you are paying £50 per sale and your average margin on each mug is £5. With all the data to hand it's obvious that you are spending more for an acquisition than you are making. Alternatively if the company were providing business to business consultancy and the potential profit from a lead coming into the website could run in to several thousands of pounds then it is clear to see that the same figures above would then be showing that the campaign is working very effectively.
All of this could possibly seem academic to many people but it is still surprising how many don't utilise this facility. Each of the major PPC companies provide a small section of code that needs to be added to the source code of the chosen conversion page (thank you for shopping page or a thanks for submitting a request page) on the website and it's as simple as that. With this in place then a pay per click campaign can not only be tracked for its performance but it provides the best platform to optimise the campaign from. For instance, if you were to change the ad text for a particular ad group then without conversion tracking you would be able to see whether that ad has been receiving more clicks. Many people would assume that more clicks would suggest that there has been an improvement but with conversion tracking setup you could well find that despite the increase in clicks there has been a decrease in conversions due to the ad text being poorly linked to the landing page.
This is just scratching the surface on what a difference conversion tracking can have in both reporting and optimising a PPC campaign, I cannot stress enough that it is essential so make sure it is a priority if it's yet to be done!
