Google Advertising Tools, 2nd Edition

Conversion Tracking

Conversion tracking is used to see whether the traffic that you’ve paid to drive to your site with AdWords actually does what you want it to do. If your site is in the business of selling widgets, then all the click throughs in the world don’t do you any good unless your site visitors buy your widgets. Conversion tracking is a mechanism that helps you understand empirically whether site visitors coming via AdWords are converting (i.e., performing the action you desire), and what percentage of the visitors sent to your site by AdWords do, in fact, convert.

ROI and Conversion Tracking

If you understand what a conversion is worth to you, and know the percentage of CPC AdWords visitors who do convert (the conversion ratio), then it is easy to calculate your return on investment (ROI) for an AdWords campaign. If the amount each conversion is worth multiplied by the conversion ratio is greater than your average CPC, then your AdWords campaign is producing a positive ROI—and probably makes sense.

You could write this as an equation. For an AdWords campaign to make sense in the long run, the following should be true:

Conversion amount × Conversion ratio > Average CPC

Understanding Conversion Tracking

Google’s underlying conversion-tracking mechanism is fairly simple and works as follows:

• You add some special Google conversion tracking code to a results page on your site.

• You make sure that the results page will open when a visitor is converted, for example, by buying something ...