Conversion rate is an invaluable metric and standard from which return on investment (ROI) on any business endeavor can be based on and calculated – pay per click (PPC) campaigns notwithstanding. This is exactly why it is significant to know how to compute or project the value, and what factors affect it.
PPC’s Conversion Rate
The conversion rate for PPC is simply all conversions generated from traffic driven by PPC campaigns. Obviously, your marketing campaign’s conversion rate is a significant factor in determining ROI, and calculating just how effective your campaign is performing. Predicting the conversion rate for any PPC campaign is more difficult for new endeavors than existing ones because of the lack of prior data, and as such can even be projected (at worst) from pure intelligent guesswork that attempts to factor in hypothetical marketing constants.
The good news is these marketing constants – the factors that drive conversion rates – are always present; the bad news is that they are difficult to measure.
Conversion Rate Factors
Some factors that drive conversion rate for organic traffic are also present in PPC conversion, with the only difference being the source of traffic and the landing page visitors are first directed to. Factors that are always present are:
- PPC keywords – The main keywords that trigger search engine results page ads for bid-based PPC
- Landing page makeup – The form and function your landing page offers its visitors, including any interactive elements such as video
- Usability and design – How well visitors respond to overall design, or in other words, the “impression” your lead generation or landing pages have
- Content or marketing copy – The sales pitch your landing pages contain
There is as yet no means to translate usability and marketing copy into numerical metrics. This is why these factors, however always present for analyses, are hard to measure. For existing campaigns that require updates or tweaking, metrics that dictate conversion rate include:
- The sales process – Takes sales process complexity and length into account, among others
- Response of target demographic – From leads generated to sales generated and of course, the existing data on current conversion rate
- Existing PPC traffic – Includes unique and return traffic
Many of these factors have numerical measurements that are easy to analyze and are intuitive to act upon, making it easy to project and calculate PPC conversion.
The Ideal Average Conversion Rate
As with every investment – not just in marketing, but in business in general – the ROI is always a decisive factor. This means that the average PPC conversion rates you want to aim for should be a unique balance of cost-per-click (CPC) and actual sale in that for the entire campaign you are not spending too much just to raise conversion to its highest point and maintain that as an average.
To put this into perspective, consider a PPC campaign where you spend an average $1 CPC to generate $4 revenue, and the average conversion rate is 3.5%. If through tweaking conversion factors, you find that you can increase your conversion to 5.6% at $3 CPC and $6 revenue, it would be best to maintain your average at 3.5% conversion. The long term difference in CPC to revenue ratio does not justify the higher average conversion rate.
The bottom-line is the ROI in the long run – so long as your conversion rate puts out the highest ROI, then that is your ideal PPC conversion rate.