A marketing manager set up conversion tracking and wants to add a column for conversion value per cost. How is that calculated?
- It’s calculated by dividing the number in the conversions column by the total eligible interactions.
- It’s calculated by dividing the total cost by the number in the conversions column.
- It’s calculated by dividing the total conversion value by the total cost of all ad interactions.
- It’s calculated by dividing the total conversion value by the number in the conversions column.
Explanation:
The correct answer is **’It’s calculated by dividing the total conversion value by the total cost of all ad interactions.’** Conversion value per cost, also known as return on ad spend (ROAS), is a crucial metric in digital advertising that measures the efficiency and effectiveness of advertising campaigns. It indicates how much revenue is generated for every dollar spent on advertising. To calculate this metric, you divide the total conversion value, which represents the revenue generated from conversions attributed to the ads, by the total cost of all ad interactions, including clicks, impressions, and other interactions. This calculation provides insight into the profitability of advertising efforts, helping marketing managers assess the return on investment (ROI) of their campaigns. A higher ROAS indicates better campaign performance, as it means that the advertising spend is generating more revenue relative to its cost. Therefore, by adding a column for conversion value per cost and calculating it using the total conversion value divided by the total cost of ad interactions, marketing managers can evaluate the effectiveness of their advertising campaigns and make data-driven decisions to optimize their ad spend and maximize revenue.