How is cost per conversion really calculated?
We were all taught that cost per conversion is cost divided by converted clicks but according to Google Adwords that’s kinda old news now.
The way it’s now really calculated is eligible costs divided by eligible converted clicks – what does that mean you say?
Well lets have a shot at this; the cost/total converted click that is used to calculate cost per conversion now factors in and excludes the following three scenarios when it is being calculated:
- Clicks before conversion tracking gets activated
- Clicks of certain click type (e.g. click on “Get Direction” link of location extension)
- Clicks from browser/device that don’t accept Cookies
However we are still charged for each ad click, and depending on whether or not the person has cookies enabled on their device(s) then the cost of the click gets excluded from calculation for the overall cost per conversion.
Bottom line: WE are no longer able to calculate the cost per conversion manually anymore and we are reliant on AdWords to provide this cost to us.
What do we do about it? How do you think you will go trying to explain the above to your client? Reckon they will understand? Reckon they will even believe you?! The answer to both is probably, no.
So Jimmy works out CPA the old way, the logical way, the way we, as agencies understand and the way clients have been educated to calculate the data.
Keeping things simple.