Google Conversion Optimizer – Worth a Try?

Wednesday, June 4th, 2008
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Google recently released a new feature in AdWords called Conversion Optimizer. This new tool simply allows advertisers to specify the maximum they would like to pay for an acquisition or conversion. With that value and by looking at previous conversion history, Google then controls the CPC (cost per click) values for the advertiser.

If your initial reaction to this feature is skeptical, you aren’t alone. Why would you let the company you are paying control how much you are going to pay them per click? Not to mention that fact you may have managed CPC campaigns for years with great success.

After hearing a success story based upon this feature, we decided it was worth a test. In getting started, we looked at our CPA (cost per acquisition) over a specific time period for a popular campaign and used that CPA as a starting point in Conversion Optimizer. We compared four days worth of data in one week to the same four days worth of data in the next week. The results were surprisingly pleasant. Our CPA actually decreased by 36% and our number of acquisitions increased by 49%! We spent less money in total and generated far more conversions. That’s a significant improvement and enough to convince us to leave the feature on.

In a non-testing environment, you might set your max CPA based upon business metrics rather than historical averages. However, if you want to quickly get a gauge whether or not this tool is right for you, setting your CPA based upon historical averages might make sense for a short test. Just because it worked well for us, does not necessarily mean it will work for you. Everyone’s marketing environment is different.

Unfortunately, not every campaign may be eligible for Conversion Optimizer. A campaign must have at least 200 conversions in the last 30 days. It goes without saying that you must also have Google AdWords conversion tracking enabled with your conversion code in the correct place so that Google can measure your conversions properly. In the case of online merchants, this is often the “Thank you for your order” page. Regardless of whether or not you try conversion optimizer, any merchant using AdWords should use conversion tracking. It should also be noted that there are certain features which are not supported when Conversion Optimizer is enabled.

If you find that Conversion Optimizer works well for you, one of the biggest advantages is that you’ll spend significantly less time managing bids. It is no longer possible, nor necessary, to go in and manipulate bids for every keyword. You just set your max CPA for the entire campaign or at the Ad Group level, and let Google take care of the rest.

So why would Google release a feature that has the potential to increase your conversions at a lower cost? Simple, Google AdWords is a marketing vehicle that enables companies to make money. If you spend X amount of money, you should make more than X in return. If one of their client’s cost per conversions goes down, it doesn’t mean they are going to spend less money with Google. In fact, they will likely allocate more of their marketing budget to Google because it is providing very competitive (if not the lowest) CPA of all their marketing channels.

After receiving a degree in Industrial Engineering from Cal Poly San Luis Obispo, Alex began his career as a technology consultant with Accenture. In 1999 he left Accenture and founded Nexternal – a cloud-based eCommerce Platform company. Alex is passionate about eCommerce and online marketing. He is now a Senior Vice President of HighJump, managing the Nexternal business unit.