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CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Follower ✭ ☆ ☆
# 1
Follower ✭ ☆ ☆

Before starting any conversion will this formula work CONVERSION=CLICKS*(CONVERSION RATE/100)

1 Expert replyverified_user
1 ACCEPTED SOLUTION

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Marked as Best Answer.
Solution
Accepted by topic author venkatesh s
September 2015

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Participant ✭ ✭ ✭
# 5
Participant ✭ ✭ ✭
Hi Venkatesh,

It is something that is extremely difficult to predict and given you are trying to estimate the number of conversions based on budget this will be even more difficult. This is the case because the more estimated values you use the more scope for error you are introducing.

If you want to calculate how many conversions you will get with a certain budget you will need to know Cost per Click and Conversion Rate. If you do not know these factors accurately then you will have to estimate them and that allows for a large potential error.

Conversions = Clicks*(CR/100)
Clicks = Budget/CPC

So if you have a budget of $1000, CPC is $1, you will receive 1000 clicks, if CR is 2% that will give you 20 conversions. But if CPC is actually $1.5 then you will only receive 666 clicks and thus only receive 13 conversions. A fairly large difference in terms of CPA. and if CR is only 1.5 then you will receive 15 conversion with $1 CPC and 10 on $1.5 CPC. So there are large discrepancies for small changes, and considering all estimated totals can and will vary you have know way of accurately predicting which way each will go. You CR could end up being much higher, but so could CPC and vice versa.

Furthermore if you only know the number if impressions then you will need to know the CTR in order to calculate how many clicks you can receive irrespective of budget.

It is at best an estimation without knowing actual performance. And unfortunately performance can vary greatly, not just from vertical to vertical but from account to account.

That all being said, there is some value to estimating, as you can be very conservative with your estimates and if it is found that the CPA from conservative estimates is profitable then you can be confident in the ability to generate a profit. And if it is unprofitable when you grossly over estimate then you are able to pre determine that perhaps AdWords is not for your particular business, which is painful to admit but it is an unfortunate truth that it is not suited to every single type of business.

Hope this helps.

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Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Top Contributor
# 2
Top Contributor

Hello,

 

Honestly I am not sure what you mean here? Can you elaborate more on your query?

 

Are you looking for Conversion Rate here or anything else?

 

Pankaj

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Participant ✭ ✭ ✭
# 3
Participant ✭ ✭ ✭
HI Venketesh,

I am assuming that you want to know how many conversions you will receive given a predicted number of clicks at an estimated conversion rate? This will be used for a proposal I am guessing.

Well if CR = (Conversions/clicks)*100 then it follows that Conversions= clicks*(CR/100).

So yes your formula will work.

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Follower ✭ ☆ ☆
# 4
Follower ✭ ☆ ☆
Hi clynton,

i am searching for conversion formula before we are going to start the campaign on the basis of budget. how many conversions
Marked as Best Answer.
Solution
Accepted by topic author venkatesh s
September 2015

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Participant ✭ ✭ ✭
# 5
Participant ✭ ✭ ✭
Hi Venkatesh,

It is something that is extremely difficult to predict and given you are trying to estimate the number of conversions based on budget this will be even more difficult. This is the case because the more estimated values you use the more scope for error you are introducing.

If you want to calculate how many conversions you will get with a certain budget you will need to know Cost per Click and Conversion Rate. If you do not know these factors accurately then you will have to estimate them and that allows for a large potential error.

Conversions = Clicks*(CR/100)
Clicks = Budget/CPC

So if you have a budget of $1000, CPC is $1, you will receive 1000 clicks, if CR is 2% that will give you 20 conversions. But if CPC is actually $1.5 then you will only receive 666 clicks and thus only receive 13 conversions. A fairly large difference in terms of CPA. and if CR is only 1.5 then you will receive 15 conversion with $1 CPC and 10 on $1.5 CPC. So there are large discrepancies for small changes, and considering all estimated totals can and will vary you have know way of accurately predicting which way each will go. You CR could end up being much higher, but so could CPC and vice versa.

Furthermore if you only know the number if impressions then you will need to know the CTR in order to calculate how many clicks you can receive irrespective of budget.

It is at best an estimation without knowing actual performance. And unfortunately performance can vary greatly, not just from vertical to vertical but from account to account.

That all being said, there is some value to estimating, as you can be very conservative with your estimates and if it is found that the CPA from conservative estimates is profitable then you can be confident in the ability to generate a profit. And if it is unprofitable when you grossly over estimate then you are able to pre determine that perhaps AdWords is not for your particular business, which is painful to admit but it is an unfortunate truth that it is not suited to every single type of business.

Hope this helps.

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Follower ✭ ☆ ☆
# 6
Follower ✭ ☆ ☆

Thanks to all for sharing your valuable views on conversion formula 

Re: CONVERSION FORMULA WILL WORK FOR SEM PROPOSALS

Participant ✭ ✭ ✭
# 7
Participant ✭ ✭ ✭
Glad I could help!