The pay-per-click (PPC) landscape has become so saturated that only the most analytical marketers can dependably turn a profit from their paid search, display, and social ads. These data-driven marketers are able to effectively manage their PPC campaigns to a target cost per conversion (or cost per lead, CPL), meaning they’ll continue to see campaigns with a predictable, repeatable profit margin.
Everybody else is most likely paying too much to acquire customers.
As it stands, sophisticated and aggressive PPC marketers will eventually hit the ceiling price for a click, forcing them to find operational efficiencies and higher conversion rates to improve their margins. Not-so-savvy marketers will need to look for cheaper, less qualified traffic sources or get out of the PPC game altogether.
The Essential Metrics PPC Marketers Need to Track
Whether you’re a PPC veteran or just getting started with Google Ads, the two most important factors for improving the cost per conversion of your campaigns are cost per click (CPC) and conversion rate (CR). The problem is that they’re independent variables and don’t always move in the same direction.
As the cost of a click rises, the cost per conversion will also increase, assuming the conversion rate stays constant. That means marketers who focus on optimizing for lower click costs or higher conversion rates will consistently achieve better results and remain more competitive.
CPC or CR—Which Should Marketers Focus On?
In an ideal world, you’d be able to focus on improving both of these essential metrics, but finding the time and setting realistic expectations can be tough. When you mix in the other PPC metrics that matter to campaign performance, it only gets even more confusing.
At Workshop Digital, we built this simple but powerful calculator that lets our teams better understand and explain the relationship between cost per click, conversion rate, and cost per conversion. It’s a handy tool that’ll help you figure out where to focus your optimization efforts, whether it’s improving your paid ads or increasing the conversion rate on your landing pages.
Video: How to Use the Cost Per Lead Calculator
Focus on the Right PPC Metrics to Beat Your Competition
PPC marketers often become enamored with surface-level metrics like click-through rate, average position, or quality score. These data points are helpful in the right contexts, but they don’t directly impact cost per conversion—or your bottom line.
If you don’t focus on improving your cost per conversions (with smarter bidding and conversion rate optimization), you risk losing customers to more efficient, conversion-focused competitors. Grab the calculator and find out how you can get more out of your PPC budget.