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Best metric for location bid adjustment

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Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi, 

 

Oftentimes articles about location bid adjustments recommend using cost/conversion as the main metric to decide where to adjust your bids. 

 

I'm confused and can't understand why the more ROI-based metric conversion value/cost is never mentioned as an important metric. Different regions generally have different AOV's which is something I think should be considered. Of course this only applies to accounts where the conversion value is traceable. 

 

Is there a particular reason why all recommendations are based on cost/conversion? 

1 Expert replyverified_user

Re: Best metric for location bid adjustment

Top Contributor
# 2
Top Contributor

Hi @Brandson T I have to say I've not noticed any trend to always suggest cost/conversion is the best metric, so maybe it's just coincidence in the articles you've read.  As with most AdWords performance metrics, you should choose the one that's most relevant to your goals and requirements; if you're doing a branding exercise it'd probably be CTR or Impressions, if you're direct sales it'd be cost/conversion or conversion value/cost and so on.

 

There's no benefit in one metric over another, it's all down to what makes the most sense for you.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: Best metric for location bid adjustment

Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭
Hi https://www.en.advertisercommunity.com/t5/user/viewprofilepage/user-id/16

Thanks for your reply. And you're right, it might be nothing more than conincidence based on a too small number of sources.

And yes, in this particular case, increased direct sales is the goal. For branding purposes I'd definitely go with other metrics.

Marcus

Re: Best metric for location bid adjustment

Explorer ✭ ✭ ☆
# 4
Explorer ✭ ✭ ☆
Hello Brandson,

This is a good question and asked a lot by some of our potential and current clients.

Cost per conversion, also known as CPA or cost per acquisition, refers to a metric that treats all conversions as equal and is typically applied to service based businesses that have no way of knowing up front the value, of any, a lead will ultimately provide to their business. Unlike ecommerce clients which receive a dynamic value based on the products a consumer purchases, a service business can only count the number of leads that come in and wish to cap the maximum amount of spend they wish applied for each new lead such as a CPA less than $150.

A ROAS or ROI model for ad spend is certainly possible for a service based advertiser. There is a simple way and a more complex way to do so. The first model, is simple in that it estimates the value of leads based on the customer conversion rate (that is they become a paying client), the profit margin on average (such as 20% is earned revenues), and a customer lifetime value. For example, a service client that makes on average $1,000; converts 1 out of 10 leads and makes a 20% profit would make an average lead worth: $1,000 x .10 x .20 or $20.

This means you can apply a $20 per lead value to your conversion in the conversion settings. But this only attributes an average value that does not take into account the actual value individual leads ultimately are worth to the business.

This is where using the Google Click ID (GCLID) and the offline import conversion model provides a ROI model while attributing actual customer value to individual leads. It is more complex and you can read about it here: https://support.google.com/adwords/answer/2998031

Let me know if that helps!

Best,

Nick

Re: Best metric for location bid adjustment

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭
Hi Nick,

Thanks for your thorough answer!

I'll look into your GCLID thread as we currently don't assign acutal customer value to specific leads. In most cases our client are satisfied with a general lead value based on their business data. But exploring this option might step up our game and our offer quite a bit.

Thanks again!

Best regards,
Marcus