How is cost per conversion calculated?

How is cost per conversion calculated?

• A. Total cost of PPC media spend divided by total conversions
• B. Impressions divided by conversions
• C. Total cost of generating traffic divided by the total number of conversions
• D. Clicks divided by conversions

Answer: (C)

Cost per conversion shows how much you spend on average to achieve one conversion. It is found by dividing the total cost incurred to generate traffic (and conversions) by the number of conversions you actually obtain. For example, if you spend $1,000 and get 50 conversions, the cost per conversion is $20. This metric helps you judge efficiency and guide bidding and budgeting decisions because it reveals how much each successful action costs. The other ways of thinking aren’t right for this measure: cost per conversion isn’t derived from impressions divided by conversions, and not from clicks divided by conversions (that would be conversion rate). Limiting the cost to PPC spend makes the metric narrower and may miss other costs that contribute to conversions.

Cost per conversion shows how much you spend on average to achieve one conversion. It is found by dividing the total cost incurred to generate traffic (and conversions) by the number of conversions you actually obtain. For example, if you spend $1,000 and get 50 conversions, the cost per conversion is $20. This metric helps you judge efficiency and guide bidding and budgeting decisions because it reveals how much each successful action costs. The other ways of thinking aren’t right for this measure: cost per conversion isn’t derived from impressions divided by conversions, and not from clicks divided by conversions (that would be conversion rate). Limiting the cost to PPC spend makes the metric narrower and may miss other costs that contribute to conversions.