Cost Per Conversion

What is a Cost per conversion?

Cost per conversion measures the amount spent to acquire a customer through a pay-per-click campaign. This metric is vital as it highlights the efficiency of your advertising efforts in generating desired actions. These actions include purchases, sign-ups, form submissions, and other goals. Knowing your cost per conversion allows you to assess your PPC campaigns' return on investment. It helps determine whether the money spent on ads justifies the results.

How to calculate Cost per conversion?

To calculate cost per conversion, divide the total amount spent by the number of conversions.

Total Amount Spent / Total Conversions

What is bad Cost per conversion?

Your cost per conversion is bad if the cost significantly exceeds the profit margin or the average value of a conversion. This results in a negative return on investment. Such an inefficiency can stem from high ad spend, poor targeting, or low conversion rates. Benchmarks for bad cost per conversion vary. For example, in e-commerce, a cost per conversion above $50 for low-margin products might be unsustainable. In service industries like legal or finance, costs over several hundred dollars are problematic without matching high client value.

What is good Cost per conversion?

A good cost-per-conversion metric depends on the industry, campaign goals, and conversion value. Your cost per conversion is considered good if it falls below the profit margin for the advertised product or service. This ensures a positive ROI. In e-commerce, a cost per conversion around $10-$30 is good. For high-value services like legal or financial consulting, $100 or more costs could still be considered good. They have a high lifetime value for a new client, so this value is justified. You aim to achieve the cost per conversion that supports profitable customer acquisition.

Our key templates to track Cost per conversion

PPC multi-channel dashboard in Looker Studio

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Google Analytics PPC dashboard in Looker Studio

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How to improve Cost per conversion?

Optimize Landing Pages

Ensure your landing pages are highly relevant and optimized for conversion. You can improve conversion rates with clear calls-to-action, fast load times, and mobile optimization. Make your PPC traffic more effective to reduce the cost per conversion.

Target Keywords Wisely

Select and target keywords based on their relevance and conversion potential. Focus on long-tail keywords that are more specific and less competitive. Such keywords often lead to higher conversion rates at a lower cost.

Improve Ad Relevance

Craft your ads to closely match the search intent of your targeted keywords. High ad relevance increases the likelihood of clicks. This leads to conversions, which can lower your cost per conversion. Regularly review and adjust ad copy to ensure it resonates with your target audience.