Value is a dynamic variable in the Google Conversion Tracking code that enables you to track the revenue generated through a shopping cart and tie that variable amount to keywords.
Consider the following example:
A merchant sells products with prices ranging from $10 to $20,000 and is currently using a $10 cost per acquisition (CPA) target.
In reality, this means that the merchant is willing to pay the same in advertising for a $10 sale as for a $10,000 sale.
This means two things:
- Sales of $10 products are not profitable
- Increased likelihood of no sales of the $10,000 product, because the bids will not be high enough to get impressions leading to a $10,000 sale
A different merchant also sells products with prices ranging from $10 to $20,000 and is paying 10% of sales for each conversion. This merchant’s ad spend is based on the value of the conversion, or cost per value (CPV), not a set target like the first merchant.
Since this merchant is spending 10% of each sale on ad spend, and assuming they have the same conversion rate as the first merchant, the second merchant has the following benefits:
- They are only paying up to $1 per conversion for $10 products (and are profitable)
- They are willing to pay up to $1000 per conversion for the $10,000 products (excellent chance of getting impressions and clicks)
Switching from cost per acquisition (CPA) to cost per value (CPV) (cost of revenue) usually makes a campaign more profitable (reduced CPCs) and rapidly grows revenue (increased ROI).
Finch takes cost per value into consideration and determines how much to pay per click for keywords driving both $10 and $10,000 sales.