The Challenge with Max Conversion Campaigns
Running a max conversion campaign for seven months with fluctuating conversion rates can be frustrating, especially in a variable pricing model like yours. You might find that some days bring in 2-3 conversions while others yield just 1-2. This inconsistency raises a crucial question: are you using the right bidding strategy for your service?
Why This Problem Matters
When you’re offering a digital service with variable pricing, relying solely on a max conversion strategy can lead to inefficiencies. The issue lies mainly in the fact that you’re aiming to achieve a specific number of conversions, without considering the individual value of those conversions. In your case, a $30 coaching session is far less valuable than a $300 one. Max conversion campaigns may not quantify this difference effectively.
Transitioning to Max Conversion Value
The better option for your situation is to switch to a max conversion value campaign. This type of campaign takes into account the varying values of each conversion, allowing for more intelligent bidding. Instead of just chasing numbers, you’ll be optimizing for revenue, better suited for your variable pricing.
How to Calculate tROAS from tCPA
To determine the target Return on Ad Spend (tROAS) from your current target Cost Per Acquisition (tCPA), use the following formula:
tROAS = (Revenue per conversion / tCPA) x 100
This formula will give you the percentage you’d like to attain for each dollar spent. For instance, if your average revenue per conversion is $200 and your tCPA is $40:
- tROAS = ($200 / $40) x 100 = 500%.
Actionable Tips for Implementing Max Conversion Value
- Evaluate Your Variable Pricing: Analyze the average revenue from your coaching services to understand the typical value of a conversion.
- Start with a Conservative tROAS: Set your initial tROAS percentage at a modest level and adjust based on results.
- Monitor and Optimize: Keep a close eye on performance metrics after switching and be prepared to tweak accordingly.
- A/B Test Pricing Strategies: Experiment with different pricing structures for your services to see if conversion rates improve.
- Use Analytics Tools: Implement robust analytics tools to track the performance of your campaign and customer behaviors.
By leveraging max conversion value instead of max conversion, you can focus your resources on conversions that genuinely matter, leading to better outcomes for your business. Take the time to analyze your strategy, tweak your goals, and you’ll be well on your way to smarter, more profitable advertising.