It's the Conversion, Stupid

  |  October 18, 2011   |  Comments

If you are determining your paid search metrics by numbers other than conversions, you need to pay attention.

One of the most colorful political strategists of our time is James Carville. I once saw him crack an egg, a raw egg, on his head on the show "Meet the Press."

He came up with the saying "It's the economy, stupid." It's possibly one of the most reused sayings in politics.

I wanted to steal it for paid search today.

I've been talking to multiple people about the topic of paid search over the last couple of weeks. The importance of tracking by conversions has come up repeatedly.

Now, if you already track your paid search by conversions, then good for you. You are not my target audience for today. But, if you are determining your paid search metrics by numbers other than conversions, or if you don't know what I'm talking about, please keep reading.

To steal another political saying, I want no paid search advertiser left behind.

In Google AdWords, under "reporting and tools," you will see a link for "Conversions." Just click on that. In Microsoft adCenter, go to your specific campaign and click on "Change Settings." In the top right corner of the page, check the box "Track Conversions."

Conversion tracking is getting increasingly more sophisticated and advanced. But today I want to just focus on the good old "paste some code on the thank you page" conversion tracking.

Conversions can be many different things. They could include things such as:

  • Filling out a form.
  • Buying something.
  • Downloading a white paper.
  • Spending a certain amount of time on the site.
  • Watching a video.
  • Making a phone call.

One of the easiest things to do is to track an online form. Someone fills out a form requesting more information. They press the submit button and are taken to a page that thanks them and tells them you will be in touch soon. This is called the thank you page. This is the page where the code goes. Conversion code goes on the page that follows the desired action.

As I was driving into work today, I was wondering how many people actually use conversion tracking. I'm not sure I've ever seen that statistic. If you have, please tell us in the comments below. But I have a feeling that it is a very small percentage of the overall paid search advertisers. It's simply because this is mildly technical. You have to get some HTML code and paste it into a page. That is oftentimes outside the comfort zone of many small-business owners.

But I want you to force yourself to do this. It will change how you think about your paid search. It will make you a smarter advertiser.

When you look at your standard paid search statistics, you see columns like this:

Clicks
Impressions
Click-through rate (CTR)
Cost
Average position

Most people make decisions based on these numbers. If you are one of these people, you should be aware that you are probably misspending your money. Here's why:

  • Clicks. Anybody can get clicks. You need the right clicks. You can only tell that by conversion metrics.
  • Impressions. Only people with very famous brand names will see a benefit from impressions. This is how banner advertisement is measured. You need results, not "eyeballs."
  • Click-through rate. I see a lot of people making decisions on this number. It's meaningless. Your ad could be very targeted and prequalifying people who click through to your website. So a low click-through rate might be fine. We almost always see a low click-through rate once we start advertising outside of search networks. What the traffic does (conversions) on your site is what matters.
  • Cost. If the traffic is good, then I'm quite sure you would be happy spending barrels full of money. You only know if the traffic is good based on conversions.
  • Average position. You will get more traffic if you have a higher average position. But who cares? This goes back to measuring by clicks. If you have a ton of junky traffic, it is of little use to you.

Once you add conversion metrics to your paid search, you are going to see three new columns:

Conversions
Cost per conversion
Conversion rate

These are the numbers that are going to determine all your future decisions.

  • Conversions. The total number of conversions is great for people who are looking for top-line growth and stealing market share. The more conversions, the better. These people are not as concerned about the cost per conversion. They are in an intense growth phase of their business.
  • Cost per conversion. These numbers will guide the company that is looking for bottom-line growth. These people want to make money. When you see this number, you will be able to determine whether or not you have an acceptable cost per conversion. If it's too high, you are able to intelligently lower things like maximum cost per click and daily budget. That will help you rein in the overall cost per conversion.
  • Conversion rate. This number is an excellent measurement of determining the effectiveness of your landing page. You will be able to test different calls to action, layouts, and messaging by using this number. It will give you everything you need to determine whether or not your landing page is working for you.

Those last three columns are where you want to focus your attention. Once you look at those numbers, then you can go back to the other numbers and tweak them intelligently.

I know what it feels like to force yourself to do something new. It hurts your head. I know it does mine. But I'm here to tell you this is what you need to do to be a savvy paid search advertiser. If you are not doing this, please make it a priority to start tracking by conversions. You will thank me for it.

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ABOUT THE AUTHOR

Sage Lewis

Sage Lewis is the president of SageRock Digital Marketing. SageRock has been a leader in Web marketing since 1999, offering search engine optimization, paid search marketing, social media marketing, and analytics.

Sage speaks nationally with SES and other prominent Web marketing organizations. He is one of the most sought after speakers and coaches in the field of Web marketing. From coast to coast, Sage has trained, coached, and consulted with some of the largest brands and conferences in the country.

Sage is also "The Web Marketing Video Guy" with nearly 500 Web marketing videos published. Sage writes as an expert for ClickZ in the "Search Engine Marketing" section. He lives in Akron, Ohio with his wife, Rocky, and son, Indiana.

His columns can be found in the Search Engine Watch archive.

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