You can't optimize anything unless you know what parts are working and which aren't.
This is Part 2 in a Series of Articles by Ex-Googler Anton McCarthy.
- Part 1: Five Ecommerce AdWords Tips
- Part 3: Understanding AdWords Keyword Matching to Increase Ecommerce Sales
In this article you're going to learn the basics of Google AdWords Conversion Tracking. We'll cover what it is, how it works, and why you need it for your ecommerce store. Imagine this: You have an ecommerce store, and you use Google AdWords to drive traffic. You're spending part of your marketing budget on clicks each week, and you control your costs using your daily budget via your campaign settings. You let the campaign run for two weeks, and you check your online sales stats regularly over this period. At the end of the two weeks, you do a final tally of your sales, also checking how many clicks you received on your ads and how much you spent on these clicks. You have your sets of numbers in place, except there is one small problem – you don’t know how many of these clicks translated into sales on your website!
Seems crazy, right? You wouldn’t pay a mechanic to fix your car if you didn’t know what they had fixed! So, why would you spend money on AdWords clicks without somehow tracking the return on and value of these clicks?
There is an answer – and it comes in the form of a free tool that you can find in your AdWords account called Conversion Tracking. Conversion Tracking allows you to track the return on investment (ROI) of the clicks on your ads, by letting you know if a click can lead to an action on your website that you deem to be of value. These actions are called ‘conversions’, since they help translate or ‘convert’ a click into a valuable business outcome.
Specifically, a conversion could consist of one or more of the following:
- An online purchase;
- An inquiry or lead via your contact form;
- A newsletter sign-up;
- A whitepaper download.
Why Track Conversions?In addition to the fact that it makes sense to know the value of what you're spending on your AdWords clicks, tracking conversions also allows you to delve into the specifics of what's working in your AdWords campaign. So, not only can you track the overall ROI of your clicks, you can also track the following important elements:
Specific keywords that lead to a conversion: This allows you to identify which keywords are the most valuable to you, as well as the keywords which are providing less value. Using this crucial information, you can make more informed decisions around the structure of your campaigns.
The value of a conversion at a keyword level: Since you can identify which keywords lead to a conversion, you can also cross-reference the value of each conversion with the amount spent on clicks for each of those keywords. For example, let’s say you spent one dollar on Keyword A, and it resulted in a purchase worth ten dollars. You now have a piece of data that allows you to assess the value of that specific keyword over time. This means that you might assign greater budget to campaigns that contain similar keywords, or introduce more variations of that keyword in order to explore whether similar terms with lower average costs-per-click result in an even greater number of conversions and rate of return.
How Does Conversion Tracking Work?The good news is that Conversion Tracking is free and really easy to set up. It simply involves inserting a snippet of code on the landing page that a visitor reaches after they have completed a conversion. So, this could be the ‘Thank you for your purchase’ landing page, or the page that thanks them for signing up to your newsletter. Google AdWords supplies this code for you to paste on the relevant pages of your site, and you can get this code as you proceed through the sign-up steps for Conversion Tracking.
An ecommerce merchant may want to track purchases of iPhone cases on their online store. In this case, the site owner would paste the snippet of code onto the page the customer lands on after purchasing an iPhone case. In practice, the following is a typical channel from click to conversion: