Cost Per Conversion (CPC)


Why is Cost Per Conversion Important?

Cost per conversion (CPC) is a term used in online advertising to refer to the total  paid for an advertisement in relation to the success in achieving the goal of that advertisement.

Cost per conversion (CPC) is one of the easiest ways to figure out how well your ad campaigns are doing. 

If your cost per conversion is too high, it could mean something is wrong with your ads. You could be targeting the wrong audience or maybe your ad copy isn’t captivating enough. 

In the same way, a lower conversion rate could mean your ads are well optimised for your target audience hence they convert easily.

How to Calculate Cost Per Conversion

Cost per conversion is calculated by taking how much money is spent on an ad campaign, divided by the number of conversions (customers) over the same period.

Cost per conversion = Total cost of ads/number of conversions

For example, if you spend $1000 on an ad campaign and you gain 100 new customers from this campaign, your conversion will be calculated as:

$1000 / 100 = $10

Your cost per conversion, in this case, will be $10.

What is a Good Cost Per Conversion?

The answer to this question is “it depends”. It depends on factors like your industry, your product or service and the type of ad campaign you’re running. 

According to WordStream, the average conversion cost across all industries is $48.96 for search and $75.51 for display.

google adwords average - Cost per conversion
Image source: Wordstream

How to Reduce your Cost Per Conversion

As we mentioned earlier, a high cost per conversion rate could mean your ad isn’t performing well. 

Luckily there are a couple of things you can do to reduce this figure. 

Here are 4 ways to reduce your customer acquisition costs off the top of our heads.

1. Write Better Copy

Reevaluate your existing copy and write a more captivating one that will resonate with your target audience.

2. Figure out the Best Time to Show your Ads

Timing of your ads is very important. You don’t have to show your ads 24/7. Instead, figure out the best time to run your ads by diving into your analytics and show your ads only at these times.   

3. Run A/B Tests

Test different variations of your ad to see how they form and go with the best performing one.

A/B Testing Tools:

  1. GetResponse
  2. Freshworks
  3. Nelio

4. Focus on your Best Performing Pages

Dig into your analytics to see which pages convert the most. Reorganise your budget to spend more promoting these pages.

How Can We Help?

Advertising got your head in a spin? Maybe you just need pointing the right direction, or maybe you’d like someone to take over for you. Either way, we can help out.

Contact us to find out more about the services we can provide! 

We also have a variety of courses so you and your team can learn our tried and tested techniques to increase traffic, exposure and hopefully your conversions!