Conversion rate refers to the percentage of visitors that convert into leads. Conversion rate can be calculated with the following simple formula.
The rates are usually calculated for the entire campaign, but also for specific sections and terms. Conversion rates vary depending on the type of conversion. Conversion rates on the purchase of large purchase items is likely to be less than one percent, whereas conversion rates on taking part in a free competition may be more than fifty percent.
To make sure that they are getting the best results from the PPC campaign, advertisers need to monitor and make changes to the campaign regularly. Advertisers can increase conversion rates by making changes to their PPC campaigns to get better-targeted traffic. Furthermore, advertisers should acknowledge that the decision-making usually happens on the website, after the searcher has clicked on the advert. Therefore, it is important to try to make the content of the page that the searcher “lands on” as close to what the searcher is looking for. These pages, called landing pages, should drive the visitor towards the desired action in order to increase the conversion rate and consequently improve the bottom line.
A common mistake for many advertisers is that they bid on PPC engines and send all their traffic to the main page of the site, even though a page somewhere within the site would be more relevant to the searcher. In these cases, the searcher needs to navigate through the web site to find what she was looking for. It is likely that instead of navigation through the advertiser’s site, many visitors hit the back-button to return to the search results because they could not immediately find the product, service or information they were searching for.
For instance, an electronics store uses PPC advertising for its new DVD players. The ad copy is appropriate and searchers that are looking for DVD players click on the advert to buy one. They land on the main page of store with no clear reference to DVD players because the DVD players are actually under the “Home Audio/Video”-category. The visitor can get to the page where the DVD players are with two clicks from the home page. Some of the visitors probably find their way to the DVD players and make a purchase, while others turn back and try the next search result. By changing the landing page to the DVD players –page, the electronics store is likely to improve its conversion rate significantly.
The copy of the landing page should complement the copy of the PPC advertisement and steer visitors to convert into a lead. Depending on the purpose of the advertising campaign, the page copy can be anywhere between very sales-oriented to casually informative.
Most PPC advertisers attempt to sell products or services directly online. For the advertisers, writing a great sales copy is often crucial to entice the visitor to make a purchase. For example, a compelling sales copy could contain call-to-action words such as “buy” or “order” and create a sense of urgency by using words like “today” or “now”. (Seda 2004, 68.) Another tip to increase conversion rates for an e-commerce site that uses a shopping cart is to make the checkout process should be made as simply as possible for the customer. Losing a sale because the customer is unable to complete the checkout process can be very frustrating for businesses.
The most important figure for the advertiser to determine the success of the marketing campaign is the return on advertising spend (ROA or ROAS). Often referred to as return on investment (ROI), ROA measures the profit or loss of the advertising campaign. Calculating the exact ROA on any kind of advertising is nearly impossible and although search engine marketing is one of the most measurable advertising channels, advertiser can never be sure what the real ROA is. That is, unless only one very specific advertising channel is being used. A famous old saying by a department store owner John Wanamaker, “I know half my advertising is wasted. I just don't know which half.” applies to search engine marketing also.
Furthermore, for a brick and mortar company, the task of calculating ROI is even more complicated. According to studies by Forrester Research and iMedia Communications between 65 and 90 percent of all consumers buying "high consideration" products begin their research online, and then purchase offline (Grant 2004, Kerner 2004). Subsequently, it becomes increasingly difficult to evaluate whether the customer purchase decision occurred because of the online advertising or offline advertising.