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What is conversion cost? What can be done to reduce it?
Source: | Author:QS | Published time: 2021-12-21 | 416 Views | Share:


When running a SEM campaign, the conversion cost is an important metric of campaign success. ‘Conversion cost’ concerns the amount spent to increase the profitability of your brand business – for example, how many sales and subscribers you have. The remainder of this article will focus on how you could reduce conversion costs, to improve your marketing ROI.

 


What is a conversion cost? 

Assumed that you decide to promote your website online to increase brand awareness and drive more traffic. When this ad achieves the purpose of your promotion (e.g., getting a user’s contact information), this is known as the ‘conversion’ of the ad. The cost to achieve the goal of your promotion is therefore the ‘conversion cost’ of your ad.

Here is how the cost per conversion is calculated:

 

Assuming you spent a total of ¥1000 on an ad which resulted in 20 sales, the cost per conversion would be ¥50. You can then evaluate whether your cost per conversion is reasonable, based on your industry and the average value of your service or product. 


How can I reduce conversion cost?

1. PC and mobile promotion should be separated

By analyzing placement data of previous customers, separating PC and mobile placement has the following benefits:


  • Convenient data analysis 

Immediate access to PC and mobile data - you can visually see the distribution of PC and mobile data consumption. Although the two devices can be placed together to analyze the data separately, it is best to analyze the data separately, as the information will be more detailed.


  • It is more convenient to adjust the bidding price of ads

The bidding price is not separated, the mobile side can only change the bidding price through the factor setting, and there is no way to be specific to each keyword. Therefore, if the bidding price of PC devices is also adjusted, which is not in line with the actual promotion situation.


  • Budget is easier to control

Take one of our education clients as an example. Both mobile and PC ads are consumed quickly, but there is no way to directly see which words are consumed first on PC and mobile, and even if we did, we would have to download detailed data tables for filtering and analysis. The ability to view data immediately after individual placement saves time on data analysis, making ad budget control more convenient. 


Again, using the education client as an example, October 15 was when the adjustment was completed. Compared with the last data, after separately placing PC and mobile promotion, conversion costs were lowest, but the number of clicks is similar to the time when ad spending was several times higher. Even on some dates, the clicks are higher than the time when the spending was higher.


 

Trend graph of advertising cost, CPC, and average price per click


2. Increase the number of ad creatives and keywords

  • Add as many ad creatives as possible

First and foremost, include as many ad creatives and creative styles as you can. For example, develop ad creatives from different factors such as product features, corporate advantages, event promotions, and so on, and display them using different creative styles such as visuals and sub-chains. 


Furthermore, you can use A/B testing to determine which ad creative is most effective. In contrast, ad creatives that do not satisfy our requirements will be suspended for optimization or destroyed.


We also suggest adding new ad content frequently to keep users interested.

 

Click data of a client after adding more ad creatives


  • Adding ‘long-tail’ keywords

Add long-tail keywords relating to the business or product you are promoting as much as possible. We have a detailed article on how to write long-tail keywords. Please refer to:https://so360.hk/news-details?article_id=235。


3. Pay attention to the arrangement of lead follow-up

Whether a visitor inquires through online customer service, calls directly, or leaves contact information in the form of a return visit, it is essential to pay attention to the importance of arranging customer service follow-up.

 


Here is an example of data from a customer. This customer advertised a landing page with online customer service, and during the first two weeks of advertising, customer service only received online traffic during business hours. Following data collection, the client expanded customer service reception throughout lunch and evening hours, and extended the offer for another two weeks. Finally, a significant improvement was made, with the number of valid clients doubled by 1.5 times. In any case, customer service is critical in terms of short reception, follow-up, and revisit. Doing these duties well can lower conversion cost and increase the effectiveness of conversion.


For more information on China's SEM advertising methods, contact our marketing consultant at: enquiry@so360.hk.


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