How is Cost Per Conversion Calculated?

 

In LeadsRx, calculating the cost of conversions involves a bottoms-up analysis of each touchpoint in a conversion path to determine the total cost. To use this feature, you'll need to connect your various ad serving systems (e.g., Google Ads, Facebook Ads) to LeadsRx, or, you can enter cost data manually for each touchpoint. Manual data can be entered here.

 

To access conversion costs, click on CONVERSION ATTRIBUTION in the left navigation panel, then click COSTS.

 

At the top of the page you can select the types of conversions to include in the analysis as well as the date range and whether to include both first and repeat converters.

 

The total cost of a single conversion is calculated as the sum of the "cost of influence" for each touchpoint in the attribution path. For example, consider this attribution path:

 

 

Let's assume that only your Google Ads have costs (organic search could also have a cost, for example, if you pay an outside company to manage SEO for you). The "cost of influence" for each of these is the cost of the touchpoint appearing within conversions. For example, let's say you spent $1,000 last month on Google Ads and had 100 clicks. The average cost of a click would therefore be $10 ($1,000 divided by 100 clicks). But if only one of the individuals who clicked on an ad eventually converts in some way, then the cost of the Google Ad being included in the conversion would be the full $1,000. This is the "cost of influence". In this example, the full cost of Google Ads must be accounted for with this single conversion.

 

Each time a touchpoint appears in an attribution path, this is counted as an occurrence of the touchpoint and has an associated cost. Consider this second example:

 

 

Now, there are two occurrences for the Google Ad click. Again, if you spent $1,000 in total for Google Ads and only had these two occurrences within the attribution paths of conversions, then the "cost of influence" would be $500 each ($1,000 divided by 2 occurrences). 

 

As more conversions occur with the same touchpoints over time, the cost of influence will go down. This is an indication that the ad is becoming more cost-effective as it essentially "works harder" to deliver conversions. For this reason, the cost of conversions overall will change over time.

 

On the Conversion Costs page, the average cost of all conversions is calculated by taking the average of all costs across all conversions within the selected date range. There is also a break out for the number of paid conversions and their associated costs as well as the number of unpaid or free conversions. These are what make up that overall average.