How does Google's AdWords Conversion Tracking Mechanism Work?

I didn't have much of a clue about your question, but I knew who did, so I asked Mark Widawer about it and after he did a spot of research, here's what he found:

This is a great question, Dave, mostly because most people who run Google Adwords campaigns don't know about or don't use Conversion Tracking. It's such a critical part of any Adwords campaign, and a much more accurate indicator of your success than a high Click Through Rate or a low Cost Per Click.

This question is also illuminating because Google doesn't do a very good job of explaining Conversion Tracking, especially as it is reported right on the Campaign Management Screen. For example, if you've got multiple conversion events set up for your campaign, Google counts conversions by people, not by events. So, if you're tracking both signups to a newsletter and sales of your product, you'll only know how many people did one or the other, and not how many of each event.

That's a bit unexpected and misleading, but given the amount of space they've got to work with, it's understandable. But that also makes the Conversion Reports that much more important.

To illustrate how Google reports the data, I set up a little test with a single keyword and three pages. The first page was the "landing page". It had a link on it to the "signup thank you page", which in turn had a link to the "sales thank you page". I ran an ad and had it clicked on at five different computers. I registered four opt-ins, and two sales. And I set a sales value of $7, and a "signup value" of $1.00.

Google accurately reported a CTR of 100%, and four "Conversions". Note again that they're referring here to the number of users who converted, not the number of conversion events. They also showed 6 Transactions, which is the number of all conversion events (4 signups + 2 sales). Because I had both a signup value and a Sales value, Google reported a Total Value of $18 (2*7 + 4*1=18). The total Sales Value was $14.

So, to sum it all up, if you've got values associated with more than one conversion event, the value of all your sales would be in the Sales Value column. The value of all of your conversion events would be in the Total Value column.

By the way, Dave, these are the kinds of intelligent questions we're answering regularly in the Landing Page Cash Machine Workshop along with other topics related directly to Google and converting Google visitors to buying customers.

I've posted a copy of the report CSV and screen shot on my website, in case anyone wants to see the actual report from Google. They'll find it here.

I hope that helps!

Mark Widawer
Landing Page Cash Machine