What is Cost-Per-Conversion?



What is Cost-Per-Conversion?

Advertisers in PPC Marketing/Online Marketing use Cost-Per-Conversion as an important metric. It measures the cost incurred by an advertiser to get one conversion.

How to calculate Cost-Per-Conversion?

The steps to calculate the Cost-Per-Conversion aren’t difficult. But the quality insight it provides is valuable.To get clicks, you spend some money. And these clicks lead to conversions. The cost of all the clicks to the number of conversions from these clicks, this is your cost per conversion.

Cost-Per-Conversion = Total cost for clicks / Number of conversions

For instance, the total number of clicks on your ad or the total number of visitors on your website during the month of April is 50,000. And to get these clicks/visitors, you have spent $25,000 at $0.5 per click. Of these 50,000 visitors, 10,000 visitors took an action which you set as a conversion. This basically means that you spend $25,000 to attain 10,000 conversions. We can calculate your cost using the above formula. It comes up to $2.5.

Note: Cost-Per-Action or Cost-Per-Acquisition are popular synonyms.


What is Cost-Per-Conversion bidding?

Cost-Per-Action bidding or Cost-Per-Acquisition bidding are essentially Cost-Per-Conversion bidding. Advertisers use this optimization method to maximize conversions for a given amount. Using this strategy, you don’t worry about how much you pay Google or other online advertising platforms for each click. Rather, you try to look at the bigger picture and calculate how much does one have to pay for a conversion. So even if you have to pay really high for a keyword which converts really well (better conversion ratio), You are okay with it as it gives you conversion under your desired cost per conversion target.

You make money if you are an e-commerce advertiser and you set a purchase made from your website as a conversion. Or if you are lead-generation platform host, you got a value addition when a visitor fills in a contact form. An optimization strategy optimizing for this end result is more likely to be beneficial for a company as it looks at actual sales than just clicks.

Cost-Per-Conversion is a very fruitful way of spending your money. It is a very wise investment in AdWords. Understanding the basics of tracking different conversions like call conversions, website conversions helps. And tracking conversion metrics like conversion rate is vital for successful implementation of this model.


About the author

Mantha Sai Praveen

Content marketer by day, a poet by night.