Introduction
In the world of digital marketing, Google Ads plays an important role in reaching potential customers. One of the most important aspects of running successful ads on Google is knowing how to set the right bidding strategy. Two terms often used in Google Ads bidding are Conversions and Conversion Value. While they may sound similar, they each measure different aspects of campaign performance.
This blog will walk you through what conversions and conversion value mean, how they differ, and when you should focus on each. By the end, you’ll have a clearer understanding to make better ad decisions.
Understanding What is Conversions in Google Ads
What is a Conversion?
In Google Ads, a conversion is any action taken by a visitor on your website or app that’s valuable to your business. Think of it as a goal you want visitors to complete. Conversions could include making a purchase, filling out a form, signing up for a newsletter, or even clicking a phone number to call your business.
Conversion Example: Suppose you run an online spice shop. Every time someone purchases a product, it counts as a conversion. Other conversions could include signing up for email updates or downloading your recipe eBook.
Why are Conversions Important?
Conversions are important because they tell you if your ads are working. More conversions mean more people are doing what you want them to do. This metric helps you measure ad effectiveness and tells you if your budget is well spent.
What is Conversion Value?
Definition of Conversion Value
While a conversion counts each completed action, the conversion value is the monetary worth of that action. Conversion value helps you understand the financial return you’re getting from your ads by assigning a value to each conversion.
Conversion Value Example: Continuing with the spice shop example, imagine one customer buys a 100-rupee pack of cardamom, while another buys a 1,000-rupee pack. Both are conversions, but their values differ. The total conversion value here is 1,100 rupees, but you have two conversions.
How is Conversion Value Used?
Conversion value is useful for campaigns focused on revenue. It’s particularly valuable in e-commerce, where every sale can be worth a different amount. Setting conversion values lets Google Ads prioritize high-value actions, helping you maximize return on investment.
Differences Between Conversions and Conversion Value
Here’s a table summarizing the differences between conversions and conversion value:
| Aspect | Conversions | Conversion Value |
|---|---|---|
| Meaning | Counts the number of actions completed | Shows the total financial value of conversions |
| Purpose | Measures quantity of actions | Measures quality or monetary impact |
| Usage Example | Total sign-ups, purchases, calls | Total revenue generated from sales |
| Ideal for | Campaigns aiming for more actions | Campaigns aiming for high revenue |
| Focus | Volume of actions | Financial return on ad spend |
Which Should You Focus On? Conversions or Conversion Value?
When to Focus on Conversions
If your campaign goal is to generate more leads or actions, focusing on conversions is ideal. For example, if you run an educational institute, you may want as many people as possible to sign up for a demo class or fill out a contact form. In this case, tracking the number of conversions matters more than the value.
When to Focus on Conversion Value
If your goal is to maximize revenue, conversion value is the better metric to focus on. For an e-commerce store, understanding the value of each purchase helps prioritize high-revenue actions over low-revenue ones.
Using Both for a Balanced Approach
For some campaigns, you may want a balance of both conversions and conversion value. For example, if you’re running a sale, you may want to increase the number of sales (conversions) but also track the value of each sale to ensure profitability.
How to Calculate Conversion Value in Google Ads
Calculating conversion value in Google Ads is straightforward:
- Set Conversion Actions: First, decide on the actions you want to track. For each action (like a purchase), assign a value.
- Add Conversion Value: In Google Ads, go to your conversion settings and set values for each action. You can use a fixed value (e.g., each purchase is worth 100 rupees) or a dynamic value (e.g., value varies based on the product price).
Simple Formula: To calculate conversion value manually, use this formula:
Example: If your spice shop made 10 sales, with each sale bringing in different amounts totaling 2,000 rupees, the average conversion value is 200 rupees.
Example: If your spice shop made 10 sales, with each sale bringing in different amounts totaling 2,000 rupees, the average conversion value is 200 rupees.
FAQs
1. What is the conversion value?
The conversion value represents the financial worth of all conversions generated by your ad. It shows how much revenue your ad is bringing in.
2. Should I focus on conversions or conversion value?
It depends on your goals. If you want more actions (like form fills or demo registrations), focus on conversions. If you’re aiming for higher revenue, focus on conversion value.
3. How do you calculate conversion value in Google Ads?
Assign values to each action through the Google Ads settings. The total conversion value is the sum of these assigned values for all completed actions.
4. Which is better, conversion or conversion value?
Neither is strictly “better.” Each serves a different purpose. Use conversions for campaigns focused on volume and conversion value for campaigns focused on revenue.
Conclusion
Understanding the difference between conversions and conversion value is key to making the most out of Google Ads. Both metrics have unique advantages, and choosing the right one depends on your advertising goals. Tracking these metrics effectively can help you use your budget wisely, making your ads more impactful and profitable.
Want to learn more about digital marketing and Google Ads strategies? Visit Beebots Learning Hub for more informative blogs, resources, and guides that help you grow in the digital marketing field.