Google: Here’s Why AdWords Cost Per Conversion Calculations Don’t Always Add Up

phone-money-featuredIn the past couple of weeks, the question of how Google calculates cost per conversion in AdWords has been percolating in the PPC community.

Robert Brady wrote a post illustrating that the cost per conversion reported in AdWords does not always match the manual calculation of dividing reported spend by reported conversions. Mark Jensen at Get Found First followed up with an analysis of one of their accounts and also found that reported cost per conversion in AdWords did not match their manual calculations either.

For example, so far in 2013, Brady found that AdWords was reporting a cost per conversion of $23.04, yet when he calculated reported spend/conversions he got a cost per conversion of $25.13 in the account. According to Brady, the difference adds up to $55,929.56 in spend that is not accounted for by AdWords in reported cost per conversion.

So what’s going on here?

The main reason Google cites for the discrepancy is “ineligible” clicks. Per Google’s support pageThe conversion rate is adjusted to reflect only the ad clicks on which we can track conversions.

In order for AdWords to track conversions, the referring source needs to be able to accept cookies in order for the JavaScript tracking code to load when a user reaches the conversion page.  In the event that doesn’t happen, Google filters out the clicks from those sources when calculating conversion metrics.

When I followed with Google on this issue, a spokesperson gave us this statement:

“We’ve long excluded a small percentage of ineligible clicks when we calculate metrics like ‘Conversion Rate’ and ‘Cost Per Conversion’ in AdWords.  For example, clicks from a small subset of older mobile devices and mobile traffic are not eligible for conversion tracking. As a result, reported conversion metrics may differ slightly from manual calculations.”

So clicks from older mobile devices that can’t accept cookies are  excluded from AdWords conversion metric calculations, but are still included in the click and cost totals reported in AdWords.

This explanation lines up with a post on the Cue blog that addresses the tracking issues from older mobile devices that AdWords Support tweeted to Robert Brady. Now Google has confirmed this is at least part of what is happening in the statement above.

Is there more to this?

Here are some other thoughts, which Google has not provided comment on at this point.

Clicks from  Google partner sites that block cookies could theoretically be counted as ineligible in the way older mobile devices are.  The PPCHero blog has also addressed the fact that some Google display network sites can’t track conversions.

Martin Roettgerding suggests basic rounding errors also could be playing a part in the discrepancies. Here’s the example he gave in response to the post from Get Found First:

bloomarty-rounding-error

Again, Google has not commented on these other thoughts on conversion calculations. I’ll update here if they do.

Related Topics: Channel: SEM | Google: AdWords | Top News

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About The Author: writes about paid online marketing topics including paid search, paid social, display and retargeting. Beyond Search Engine Land, Ginny provides search marketing and demand generation advice for ecommerce companies. She can be found on Twitter as @ginnymarvin.

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  • http://righteousmarketing.com robertbrady

    Ginny – Great post. Very diplomatic, but am I the only one who feels like Google is “cooking the books” with this methodology?

    I mean, they still charge the advertiser for the click and then the only costs NOT counted are the ones where Google can’t track a conversion. Thus the visible Cost/conv. is guaranteed to be better than the calculated Cost/conv.

    Seems deceptive to me.

  • Sam Mazaheri

    This certainly should have been more transparent

  • Ginny Marvin

    Thanks, Robert. I hear you. I think I’d call it a reporting “nuance” that should be well disclosed. I certainly get why they do it. Essentially removing ineligible clicks from the conv. calculations (while still actually charging for the clicks) is like saying, we’ll assume that the ineligible clicks converted.

    Whereas if they included ineligible clicks in the conv. calculations, it would treat them as if they didn’t convert.

    Given that they’re saying the clicks are coming from old mobile devices it seems less likely that this traffic converts well (who’s going to go through a conversion path on a crummy old mobile device?). I’m hoping we’ll get some more info on this from them. We’ll see.

  • http://righteousmarketing.com robertbrady

    I think it needs addressing because the account I referenced in my post is seeing from 3%-7% of spend being “ineligible” depending on the campaign. I’ve audited an account where it was as high as 12%.

    That’s a significant amount and needs to be accounted for.

  • Eivind Otnes

    Agreed. It is understandable that Google do not want to weaken the cost per conversion by including clicks that can not be tracked, but the real concern is the fact that this has not been communicated clearly to advertisers.

  • Ronnie’s Mustache

    This is understandable. I think they do explain this but not as it directly applies to the Cost per Conv.

    Google should include this in their help section under the appropriate topics.

    4-6% (or more in some cases) is a very big deal.

  • Jenn

    Great post, I just have to say, this is real news in the SEO community. Thank you for articles like this.

  • http://www.aomservices.com/ Derek Abbring

    Has anyone ever noticed inside analytics that traffic from adwords “time on site” is typically much lower than traffic entering the site from an organic source for the same highly competitive keyword? So much lower in fact it looks like fake traffic. Avg time onsite is 0-1s for the keyword from adwords but over 3 minutes for the same keyword from an organic source. Both have entry to the same page. That leads me to think that some people or businesses are maliciously clicking away the daily ppc budget. When I contacted G about this happening on over 5 client sites, they told me they didn’t see anything malicious. Conversion data and other keywords show me it is not a landing page issue, but it sure does seem fishy to me. How to prevent this? Anyone else notice this?

  • http://www.aomservices.com/ Derek Abbring

    I have years and thousands upon thousands spent with adwords, I agree.

  • Ginny Marvin

    You’re welcome, Jenn, glad it’s helpful.

  • http://www.marcana.com Mark Brimm

    Seems like a rather old question to me. Google disclaims the exactness of numbers on conversions in numerous places on AdWords Help, especially as it relates to CPA estimates, and the discrepancies seem very much in line with the difficulties that obstinate cookie-blocking on many company/home networks provide (as well as IP-blocking for some sensitive networks), in addition to the foul clicks activity which cannot ultimately be fully accounted for or caught (for the just mentioned reasons). I’ve had beefs with Google on many a search issue…but this is thus far not really one of them. Business motivations are there for Google to be as transparent as possible as regards the conversions data, as successful campaigns are their ideal reason for existing. A to-be-expected margin of incomplete reporting comes with the PPC territory.

    And to be fair, this is not the ONLY area where we have to take the platform provider’s word on data consistency, though I do applaud when someone on any popular search blog scrutinizes or holds a giant like Google accountable for anything whatsoever. And very valid questions and approaches, nonetheless. Well done there.

  • http://www.marcana.com Mark Brimm

    Click-happy “shopping mode” searchers are going to pump up bounce rates, no doubt. So could keywords needing trimming. Server logs are the first step to detecting a singular IP address/network–that is if they aren’t sophisticated and using software, which I think is the preferred way these days. The bounce rate could also be accounted for in a number of ways in terms of campaign keyword optimization.

    I think it’s a given that a certain percentage will be undetected malicious clicking using new software/systems that do fancy hacks. Ultimately, you have to try to weed out the offending regions to catch the low-grade teams Google hasn’t blocked yet. Proactive blocking of certain IP addresses (which could be either individual “consultants” or entire click-houses off-shore) is the best way to trim away the low-tech individual parasites.

    Google can only detect these if there is a very consistent pattern to auto-block. New IPs are generated periodically by sophisticated systems, however. So, it might be next-level to target/block by region, even if only temporarily, to at least determine the region. Ultimately, it’s possible to spoof on a grand scale that includes regional switching, I think. Google eventually learns which programs to block. So the shortest strategy could be combination of further refining keywords and placements, in addition to IP-blocking, server log analysis and collecting data on IP addresses for use in your report to Google’s quality control investigation team–they may need something compelling server-log-wise to go beyond what they can show for one isolated account. I’ve seen suspicious clicking via an odd time zone for an account with North American targeting only. Server log evidence are the required 1st step. I’d use the obvious click reports and analytics clues to back up your hypothesis (“paid clickers on X time-zone outside the targeted time?”, etc.).

  • http://www.aomservices.com/ Derek Abbring

    Thank you for your advice Mark, I will implement the strategies you mentioned and report my findings to Google. Thanks again for your insight!

  • Michael Colart

    What has this got to do with SEO? *sighs*

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