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 |