Using Conversions Rates to Track and Learn

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It is fairly easy to measure conversion rates with your Paid Search Engine Marketing campaigns, such as Google AdWords or Yahoo! A conversion simply means that your visitor has reached a goal: a product has been purchased, or a newsletter subscription has been initiated. Every site must have its own definition of what a conversion is.

The conversion rate indicates how many visitors are necessary to yield one conversion. Thus, a conversion rate of 2% means that one out of 50 visitors will convert. Depending on your industry and the kind of conversion, these rates can vary widely: The download of a free brochure would end up having a higher conversion rate than that of a 10-page technical white paper.

If you are tracking the conversion rates for your Paid Search Engine Marketing campaigns, you will have various data at your disposal. The following statistics of a fictitious headset manufacturer gives an overview of the keywords, the number of clicks received and the conversions:

Which conclusions can be drawn from these numbers?

• The search phrase "headset manufacturer" has a low click volume but a very high conversion rate. The cost per conversion is also relatively low. The campaign could be optimized by reducing or eliminating the ads for "headset" and increasing the ads for "headset manufacturer". This would end up much more cost effective.
  
  
• The search phrase "bluetooth headset" is attracting a respectable number of clicks but there are very few conversions. Since the cost per conversion is low, the ad can be left running. It would be worth the effort to determine why the click through rate is so low. Possibly the web page has too little information of bluetooth headsets.
  
  
• Certain search terms such as "handsfree solution", "voip headset" or "gaming headphones" are generating very few clicks. But these keywords have had no conversions yet. As long as the cost remains within reason, these should be monitored until conversions are achieved.
  

At this point it becomes clear why Paid Search Engine Marketing is such a beneficial starting point for a later Search Engine Optimization campaign. By using the above statistics you will be able to determine very quickly which keywords are important to your company and which are irrelevant.

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