Maximising Your Google Adwords Conversion Rate

The conversion rate is probably the most critical number there is when trying to make money online, and with PPC, it’s even more critical.

Think about it. If your campaign costs £0.50 per click, and you make £30 from each conversion, with a 2% conversion rate, how much money do you make from 100 clicks on your site?

	Cost Per Click	£0.50			Income: 100*2%*£30 = £60
 Profit Per Conversion	£30			Cost:	100*£0.50  = £50
       Conversion Rate	2%			Profit: 	   = £10

What happens if you double the conversion rate? It doesn’t double your profits!

	Cost Per Click	£0.50			Income: 100x4%x£30 = £120
 Profit Per Conversion	£30			Cost:	100*£0.50  = £50
       Conversion Rate	4%			Profit: 	   = £70

Your profits just went up by 600%. That’s a lot!

In this example, reducing your cost per click couldn’t generate this level of profit, even if the clicks were free!

Even a small increase can have a disproportionate impact on your profit - in the above example, even an increase in conversion rate from 2% to 2.2% would increase profit from £10 to £16, a 60% increase.

So, how do you improve the conversion rate of your campaign?

Page last updated by Steve Baker on May 11, 2008 at 7:08 pm.

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