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The $2 Click Beat the $1 Click

A campaign paying $2 a click can cost less per order than one paying $1. The arithmetic, and what to rank campaigns by.

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Monday’s report ranks the campaigns by cost per click. The cheapest one is at the top, it gets the extra budget, and the $2 campaign at the bottom gets a warning. That ranking is how a lot of ad spend moves, and it can point the wrong way.

An order costs the click price divided by the conversion rate

If a click costs $1.50 and 2% of clicks turn into orders, you pay $1.50 fifty times to get one order. That is $75. Cost per order is cost per click divided by conversion rate, and the click price is only the top half of that fraction.

Nine campaigns, one grid

Here is what an order costs at three click prices and three conversion rates:

  • $1.00 a click: $100 at 1%, $50 at 2%, $33.33 at 3%
  • $1.50 a click: $150 at 1%, $75 at 2%, $50 at 3%
  • $2.00 a click: $200 at 1%, $100 at 2%, $66.67 at 3%

Read across the grid. A $2 click that converts at 3% costs $66.67 an order. A $1 click that converts at 1% costs $100. The expensive click is a third cheaper per order, and the report would have cut it.

Why the pricey click can convert better

Some of that is the audience. A narrower, more specific audience usually costs more per click in the auction, and it often arrives knowing what it wants. The cheap click is frequently a browser who was never going to buy. We have not measured this for your account, so treat it as a reason to look, not a rule.

What to change this week

  • Add cost per order next to cost per click on the report. One extra column is enough.
  • Rank by cost per order, and only fall back to click price when a campaign has too few orders to say anything.
  • Check order counts before you cut. A conversion rate from 12 clicks and 0 orders tells you nothing.
  • Look at what happens after the click on your two most expensive campaigns before you trim them.

Where we land on this

The click price is the part the ad platform hands you, so it is the part everyone optimizes. The conversion rate is what happens after, and it decides more of the cost per order than most reports show. We spend our time on what is left of those clicks once the visitor has gone.

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