Google Adword Blog

How does the value of a conversion relate to the return on investment of a Google ad campaign? This is pretty straightforward Business School 101. If you understand what a conversion is worth to you, and the percentage of CPC (cost per click) 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 times the conversion ratio is greater than your average CPC, then your AdWords campaign is producing a positive ROI—and probably makes sense.

You could put this as an equation. For an AdWords campaign to make sense, then the following should be true:

Conversion amount * Conversion Ratio > Average CPC

Google’s underlying conversion-tracking mechanism bears a striking resemblence to the way Google AdSense works (AdSense is the program used to put Google contextual ads on your and my web sites):

• You add some special Google conversion tracking code to a results page on your site.
• You make sure that the results page will be opened when a visitor is converted, for example, by buying something (in the case of a purchase, the results page usually doubles as an order confirmation).
• When a user clicks your AdWords ad, Google adds a cookie to the user’s computer to track the user.
• When a user with the Google AdWords cookie on their computer opens the results page, a conversion is logged, and a special tracking message displayed to the user.

An interesting, and somewhat controversial, feature of Google AdWords conversion tracking is that as part of the tracking, Google notifies users that they are being tracked. This notification is produced by the Google-supplied code you add to the results page. A tracked user sees a message titled Google Site Stats with a “send feedback” link when the results page is opened.

Google explains that they prefer to be above board about their actions, and that the send feedback link is chance for users to understand Google’s privacy policies, and indeed to reject the Google tracking cookie if they wish.

However, most major advertising programs do provide conversion tracking options, and other advertising programs that track users and conversions do not “brand” the process. Users who click through ads in these other programs never know they are being tracked.

To summarize, Google tracks users coming through AdWords to your site by giving them a cookie. You decide when a conversion has occured by opening a page for your visitor (for example, to confirm an order - but the choice is yours!). When the two match (the cookie and the confirmation page) a conversion is recorded and reported in AdWords.

Cross-channel conversion tracking is a nifty feature within AdWords that also allows you to do conversion traffic coming in to your web properties from other advertising networks such as Overture. Taking advantage of this feature, if you are deploying ads across multiple advertising venures, means that you can use the powerful AdWords reporting facilities to aggregate your information about conversions in one place.

Filed under: Adword, Understanding Google's Conversion-Tracking Mechanism