Google: Here’s Why AdWords Cost Per Conversion Calculations Don’t Always Add Up

In the past couple of weeks, the question of how Google calculates cost per conversion in AdWords has been percolating in the PPC community.

Robert Brady wrote a post illustrating that the cost per conversion reported in AdWords does not always match the manual calculation of dividing reported spend by reported conversions. Mark Jensen at Get Found First followed up with an analysis of one of their accounts and also found that reported cost per conversion in AdWords did not match their manual calculations either.

For example, so far in 2013, Brady found that AdWords was reporting a cost per conversion of $23.04, yet when he calculated reported spend/conversions he got a cost per conversion of $25.13 in the account. According to Brady, the difference adds up to $55,929.56 in spend that is not accounted for by AdWords in reported cost per conversion.

So what’s going on here?

The main reason Google cites for the discrepancy is “ineligible” clicks. Per Google’s support page: The conversion rate is adjusted to reflect only the ad clicks on which we can track conversions.

In order for AdWords to track conversions, the referring source needs to be able to accept cookies in order for the JavaScript tracking code to load when a user reaches the conversion page. In the event that doesn’t happen, Google filters out the clicks from those sources when calculating conversion metrics.

When I followed with Google on this issue, a spokesperson gave us this statement:

“We’ve long excluded a small percentage of ineligible clicks when we calculate metrics like ‘Conversion Rate’ and ‘Cost Per Conversion’ in AdWords. For example, clicks from a small subset of older mobile devices and mobile traffic are not eligible for conversion tracking. As a result, reported conversion metrics may differ slightly from manual calculations.”

So clicks from older mobile devices that can’t accept cookies are excluded from AdWords conversion metric calculations, but are still included in the click and cost totals reported in AdWords.

This explanation lines up with a post on the Cue blog that addresses the tracking issues from older mobile devices that AdWords Support tweeted to Robert Brady. Now Google has confirmed this is at least part of what is happening in the statement above.

Is there more to this?

Here are some other thoughts, which Google has not provided comment on at this point.

Clicks from Google partner sites that block cookies could theoretically be counted as ineligible in the way older mobile devices are. The PPCHero blog has also addressed the fact that some Google display network sites can’t track conversions.

Martin Roettgerding suggests basic rounding errors also could be playing a part in the discrepancies. Here’s the example he gave in response to the post from Get Found First:

Again, Google has not commented on these other thoughts on conversion calculations. I’ll update here if they do.

Aug 16, 2013 at 11:57am ET by Ginny Marvin

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