Cost per conversion or return on investment

Many people who are trying to analyze their first AdWords accounts become confused about which way they should measure their account level so that they can make adjustments at the keyword level. There are basically two choices; cost per conversion and return on ad spend. Understanding the difference in the two will allow you to understand which the best choice is for you. Remember, however, that they are not inclusive, so you should look at the other indicator at times.

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Most experts who are seeking to use their advertising for lead generation choose the cost per conversion method as it is easier to see how it impacts your goals and your company’s performance. In order to arrive at this number, simply divide the total cost of the ads by the number of conversions that the program has achieved.

If you choose this method, then make sure to know where your breakeven point is, as you do not want to spend more than your leads are paying you. Knowing this point allows you to keep your cost per ad below that level by tweaking your accounts. There is no perfect solution, so remember to push your advertising budget just as far as you can.