Best practices for managing paid search campaigns are full of commonly held assumptions, many of which are more myth than fact—especially when it comes to SEM ad copy. This Myth Busters series tackles these misconceptions one blog post at a time. In this installment, we dispel the myth that conversion rate is the best metric for measuring ad copy test results.

The myth

As a direct-response advertiser, driving revenue and conversions is your number one objective. The ad copy with the best conversion rate should be declared the winner.

The reality

Let’s say you are an e-commerce site with an ROI objective. You run an ad copy test and get these results:

Creative CTR Conversion rate
Ad Copy 1 4% 13%
Ad Copy 2 7% 10%

The conversion rate is better on one ad, but the CTR is better on the other ad. Which do you choose as the winner?

Many search engine marketers would say, “The winner is Ad Copy 1.” Even though the CTR is a little lower, what matters is the conversion rate because it’s a direct response program.

When we plug in more data, we find that Ad Copy 1 generates five conversions, and Ad Copy 2 generates seven conversions per 1,000 impressions.

Creative Impressions Conversions Conversions-per-impression (CPI)
Ad Copy 1 1,000 5 .005
Ad Copy 2 1,000 7 .007

Is Ad Copy 1 still looking like the winner? Hardly. Although Ad Copy 1 has a better conversion rate, it generates fewer conversions overall. To account for both the volume and quality of clicks, use CPI (conversions-per-impression). CPI can be calculated by dividing conversions by impressions or by multiplying the CTR and the conversion rate.

The opportunity

Get more value out of your existing ad copy tests: evaluate them using CPI. No additional time or effort is required to measure and take action based on CPI, and you can improve your bottom-line program KPIs.

Where to go from here

Use KPI metrics like CPI that account for both volume and quality when determining ad copy test winners. Choose the metric that most closely aligns with your overall program objective.

About AdLabs Technology.
AdLabs uses AI/Machine-Learning for ad creation at scale, optimization, and analysis. AdLabs creates hundreds of thousands of ads every year and has optimized billions of dollars in ad spend.