Purchase / Conversion Value

Glossaries

Term	Definition
Purchase / Conversion Value	The value of the product or service that has been sold In digital marketing, Purchase / Conversion Value refers to two related but distinct concepts: 1. Purchase Value: This represents the actual revenue generated from a specific purchase conversion. It's typically assigned to transactions made on your website or app. For example, if someone purchases a shirt for $20, the purchase value for that conversion would be $20. Understanding purchase value allows you to: Calculate return on ad spend (ROAS): Measure the effectiveness of your marketing campaigns by dividing the total revenue generated by the total ad spend. Optimize campaigns for profitability: Focus on driving high-value conversions that bring in the most revenue. Set bidding strategies: Inform bidding algorithms in platforms like Google Ads to prioritize more valuable conversions during auctions. 2. Conversion Value: This is a broader term, encompassing the financial value assigned to any desired action considered a conversion. It's not limited to purchases and can include lead generation, app downloads, newsletter signups, etc. The assigned value may be based on different factors: Direct revenue: E.g., $10 for a lead that is likely to convert into a sale. Estimated future revenue: E.g., $50 for an app download that has a high lifetime value. Cost of acquisition: E.g., $2 for a newsletter signup that costs less to convert into a customer. Tracking conversion value provides valuable insights into: Overall campaign performance: Go beyond just conversion numbers and understand the true revenue impact. Identifying high-value segments: Analyze which conversions contribute the most to your bottom line. Prioritizing optimization efforts: Focus on improving the performance of actions with the highest value. It's important to distinguish between these two terms: Purchase value is a specific type of conversion value for purchases. Conversion value can encompass any desired action with an assigned financial value, including purchases. By understanding both Purchase and Conversion Value, you can gain a deeper understanding of your marketing results and make more informed decisions to optimize your campaigns for maximum profitability. Synonyms: PCV

Term

Definition

The value of the product or service that has been sold

In digital marketing, Purchase / Conversion Value refers to two related but distinct concepts:

1. Purchase Value:

This represents the actual revenue generated from a specific purchase conversion. It's typically assigned to transactions made on your website or app.
For example, if someone purchases a shirt for $20, the purchase value for that conversion would be $20.
Understanding purchase value allows you to:
- Calculate return on ad spend (ROAS): Measure the effectiveness of your marketing campaigns by dividing the total revenue generated by the total ad spend.
- Optimize campaigns for profitability: Focus on driving high-value conversions that bring in the most revenue.
- Set bidding strategies: Inform bidding algorithms in platforms like Google Ads to prioritize more valuable conversions during auctions.

2. Conversion Value:

This is a broader term, encompassing the financial value assigned to any desired action considered a conversion. It's not limited to purchases and can include lead generation, app downloads, newsletter signups, etc.
The assigned value may be based on different factors:
- Direct revenue: E.g., $10 for a lead that is likely to convert into a sale.
- Estimated future revenue: E.g., $50 for an app download that has a high lifetime value.
- Cost of acquisition: E.g., $2 for a newsletter signup that costs less to convert into a customer.
Tracking conversion value provides valuable insights into:
- Overall campaign performance: Go beyond just conversion numbers and understand the true revenue impact.
- Identifying high-value segments: Analyze which conversions contribute the most to your bottom line.
- Prioritizing optimization efforts: Focus on improving the performance of actions with the highest value.

It's important to distinguish between these two terms:

Purchase value is a specific type of conversion value for purchases.
Conversion value can encompass any desired action with an assigned financial value, including purchases.

By understanding both Purchase and Conversion Value, you can gain a deeper understanding of your marketing results and make more informed decisions to optimize your campaigns for maximum profitability.

Synonyms: PCV