This article explains what Conversion Values are, the benefits of using them, and how they are reported. To set or edit conversion values or to change the currency in which your conversion values are reported, follow the steps in the article.
Website conversion values are as of today important in the field of online and internet marketing campaigns. However, for the majority of website owners and site developers, the tracking of conversion values is still a mystery.
That is why the free for use Google Analytics Platform is there to solve your goal conversion values model. May it be your blog site, business site, or even online shop, it covers it all. But, it equally requires some technical support with an experienced internal analyst or even an Outsourced Google Partner. Such as the jmexclusives business management consultancy agency.
What are Conversion Values?
Conversion Values are the numerical values that you assign to specific conversions in order to represent their impact on your business. But, not all conversions are equal — some are worth more to your business than others.
In digital marketing, the general term “conversion” can mean a variety of things depending on who you’re talking to and what you’re talking about. This is particularly true within Google Ads—you can track countless actions that visitors take on your site.
What are the Benefits of Conversion Values?
First of all, conversion values help you track and optimize your campaigns’ return on investment (ROI). Whereby, you can use the target return on ad spend (ROAS) bid strategy to help maximize your conversion value. While averaging your target return on ad spend.
Another benefit of setting conversion values is to help you make more informed decisions within your account. The extra layer of visibility allows you to identify keywords, ad groups, and campaigns that show either a high or low return on investment.
This gives you the clarity to optimize and make decisions based on real ROI data, not just homogenous conversion volume and costs. Below are some other benefits of using conversion values;
1. Provides you with Better insights
You can measure the total conversion value generated by your campaigns’ conversions. This also helps you track your campaigns’ ROI by using the “Conversion value/cost” column.
Equally, you can use this data to identify keywords, Ad groups, and campaigns that show a high or low return on investment and manually change bids, budgets, and targeting.
2. Allows you to create Smarter Bidding
Once you set up conversion values, you can use the target return on ad spend (ROAS) bid strategy. Automated bid strategies automatically set bids to optimize for your performance goals across specific campaigns, Ad groups, and keywords.
With target ROAS, Google Ads will set maximum cost-per-click (max. CPC) bids to maximize your conversion value, while trying to achieve an average return on ad spend (ROAS) equal to your target.
How does Google Analytics Conversion Values work?
To set or edit conversion values or to change the currency in which your conversion values are reported, follow the steps in the article Set conversion values. And if you assign values to your conversions, you’ll be able to see the total value driven by your advertising across different conversions.
Rather than simply the number of conversions that have happened. And you’ll be able to identify and focus on high-value conversions. And when you use conversion tracking, you can assign the same value to all conversions of a certain action. Or let each conversion have different values (transaction-specific).
Conversions with the same value
For some conversions, the value can be kept the same. Whereby, you might want to use conversion values that are the same if you are tracking several conversion actions. Then again, you can capture separate values that way, say for phone calls and sign-ups.
Seeing the separate values allows for useful comparisons between two different conversion actions. And if you value calls at $5 and sign-ups at $20, this means you value your sign-ups four times more than calls. Other examples of actions that customers take that could be valuable to your business:
- form submits,
- price quotes,
- arranging test drives,
- callback requests,
- or looking up a store location.
Transaction-specific conversion values
A transaction-specific value is one that could be different each time the same conversion happens.
For example, if you own an online store with a shopping cart, one purchase conversion might be worth $25, while another is worth $500.
Meaning, you might want to use transaction-specific conversion values for your business if each of your sales has a different conversion value and you’d like to:
- Track and optimize your campaigns’ return on investment
- Use smart bidding strategies, such as target return on ad spend (ROAS). We recommend you select “Every” in your conversion counting settings if this is the case.
What are the Requirements?
Setting up a transaction-specific value requires the support of a web developer (like jmexclusives). Or in that case, someone who can integrate transaction-specific values with the google_conversion_value variable within the conversion tracking tag.
By the same token, to set up transaction-specific values, follow the steps in this article on Tracking transaction-specific conversion values.
Once you’ve set up conversion tracking, you’ll have access to conversion value data, like the sum of all conversion values for all your conversions. And to see all your conversion value data at-a-glance, you’ll need to add columns to your statistics table.
With this in mind, to add conversion value columns, follow the steps in Use columns to find specific performance data. For information about the columns that are available, see Understand your conversion tracking data.
Conversion value currency
Conversion values will always be reported to you in your Google Ads billing currency. However, you can assign a different currency to the value of each conversion.
If you use cross-account conversion tracking — managed in a manager account (MCC) — with multiple Google Ads accounts, the conversion values will use the currency of the manager account. Unless you specify a different currency with the default value or provide a currency code in the conversion tag.
However, if the Google Ads account driving a click that converts has a different billing currency, the conversion value will be converted to that account’s currency. By using the average daily foreign exchange rate.
Example
Your manager account’s default currency is British Pounds. You created a conversion action you’ve valued at £10. Someone clicks an ad served by a managed account with a default currency of Euros and completes a conversion action.
The current exchange rate is £1 = €1.19. In the managed account, we’ll show a conversion value of €11.90.
Tracking Conversions Values without a monetary value
If you’re tracking conversion actions without a real monetary value but still want a way to measure relative values of different conversion actions, you can choose not to assign a currency.
These values are often referred to as “key performance indicators” or “KPIs.”
And even if your tag includes a currency code, it will be ignored if you’ve selected no currency for the default value of that conversion action.
This lets you control whether your conversion values are measuring monetary values or KPIs without updating the conversion tracking tag on your site.
Example
You have an email sign-up form on your website and prefer not to assign a monetary value to sign-ups. But still, you want to assign a numerical value to them.
You create a conversion action and assign a value of “2” to each sign-up, and choose “No currency set.” In your reports, you’ll see a value of “2.” Regardless of your account’s billing currency or any currency code sent in the tag.
If a conversion action in your manager account has no currency assigned to the value, Google won’t do any foreign exchange conversion. Regardless of the account currency of the Google Ads account that gets credit for the conversion.
Values and Bidding Strategies
Once you set up your conversion values, you’ll be able to use the target return on ad spend (ROAS) automated bid strategy. Automated bid strategies automatically set bids to optimize for your performance goals.
To help improve your performance, target ROAS incorporates real-time details such as device, browser, location, and time of day to adjust your bids during each ad auction.
Target ROAS maximizes your conversion value while trying to reach an average return on ad spend that you set. In other words, it’s the average conversion value. For example, revenue that you’d like to get for each dollar you spend on ads.
You might want to use target ROAS when you value individual conversions or conversion actions differently and want to meet a target return on ad spend. You can read and learn more about target ROAS and how to set it up.
Return On Investment (ROI)
Whether you use Google Ads to increase sales, generate leads, or drive other valuable customer activity, it’s a good idea to measure your return on investment (ROI).
Knowing your ROI helps you evaluate whether the money you’re spending on Google Ads is going to a good cause: healthy profits for your business.
How does ROI Work?
ROI is the ratio of your net profit to your costs. It’s typically the most important measurement for an advertiser.
Simply, because it’s based on your specific advertising goals. And it shows the real effect your advertising efforts have on your business.
The exact method you use to calculate ROI depends upon the goals of your campaign.
One way to define ROI is:
(Revenue – Cost of goods sold) / Cost of goods sold
Let’s say you have a product that costs $100 to produce and sells for $200.
You sell 6 of these products as a result of advertising them on Google Ads, so your total cost is $600 and your total sales are $1200.
Let’s say your Google Ads costs are $200, for a total cost of $800.
Your ROI is:
($1200 – $800) / $800
= $400 / $800
= 50%
In this example, you’re earning a 50% return on investment. For every $1 you spend, you get $1.50 back.
Also, read and learn more about Return On Marketing Investment: What Is It?
Physical Products ROI Conversion Values
For physical products, the cost of goods sold is equal to the manufacturing cost of all the items you sold plus your advertising costs. And your revenue is how much you made from selling those products. The amount you spend on each sale is known as cost per conversion.
If your business generates leads, the cost of goods sold is just your advertising costs. And your revenue is the amount you make on a typical lead.
For example, if you typically make 1 sale for every 10 leads, and your typical sale is $20, then each lead generates $2 in revenue on average. The amount it costs you to get a lead is known as cost per acquisition.
Why does ROI matter?
By calculating your ROI, you can find out how much money you’ve made by advertising with Google Ads. You can also use ROI to help you decide how to spend your budget.
For example, if you find that a certain campaign is generating a higher ROI than others, you can apply more of your budget to the successful campaign. And in that case, less money to campaigns that aren’t performing well.
You can also use ROI data to try to improve the performance of the less successful campaigns.
How do I Use Conversion Values to measure ROI?
To identify your ROI, you first need to measure conversions, which are customer actions that you believe are valuable. Such as purchases, signups, web page visits, or leads.
In Google Ads, you can use the free conversion tracking tool to help track how many clicks lead to conversions.
Conversion tracking can also help you determine the profitability of a keyword or ad, and track conversion rates and cost-per-conversion.
Related Topics;
- Display Ads | How to Increase your Website Ads Revenue
- Google Analytics | 5 Features Every Webmaster Needs
- Increase Page RPM by 40% using these 9 Best Methods
- PPC Marketing | 10 Benefits of Pay-Per-Click Advertising
- Google Ads | Get More Customers With Online Advertising
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