Why You Don't Want To Drive Your Google Ad Cost Per Conversion Too Low

When you as the Google Ad Campaign Manager don't have a clear cost per conversion or cost per lead to aim for in the Google Ad Campaign, you're left with the task of trying to drive the cost per conversion down, down, down, as low as possible.

There are 2 problems with this strategy:

  1. Driving down the campaign's cost per conversion will eventually have an impact on total conversion volume. In other words, you'll get fewer conversions/leads in a given time period. Where do they go? To your competitors who are willing to pay more per lead. Which brings us to...
  2. You can't count on your competition being ignorant when it comes to how valuable leads are to their business, which means that if you just keep trying to lower your campaign's cost per conversion, eventually your competition will just get a larger chunk of the pie because they're willing to pay more per conversion/lead.

These are kind of just 2 angles on the same problem; you getting fewer conversions and leaving money on the table because you don't know what the true value of a lead is to your business.

The same goes for ecommerce campaigns too where you're driving sales conversions. If you're aiming to just reduce cost per conversion as low as possible, you'll eventually reduce the total volume of sales conversions coming into the campaign.

This may be okay with you, maybe you're okay with maximizing ROAS at the expensive of generating more total revenue. It's bad if you just want more total sales volume to leverage economies of scale.

Ideally, you want to identify the maximum amount you can pay per conversion and still remain profitable in your Google Ad Campaign. This will allow you to stay more competitive in the Google Ad Auction which can be the difference between success and failure.

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