Cost to Conversion Analysis

It sounds fancy. It sounds complicated. But in truth, a cost to conversion analysis is one of the most important things a marketer can do. Why? Because it provides information toward the question: are your marketing dollars going to go use?

It isn’t perfect; but it can give you a sense of what is and isn’t worth the spend.

The first step is easy; total up the entire cost of a campaign / ad etc. This includes design cost, media spend (if any), production costs etc. The full amount of money you put out.

The next step is the harder part; how many people converted based on this being “in market.” It’s difficult because of the last mile problem (can’t always see the forest through the trees) and if you have a breakdown in tracking. But assuming you have some metrics in place to track conversions and if you don’t assume these numbers to be “exact,” then this shouldn’t be impossible.

The final step: take the total conversion value minus the total cost. If you are in the black, it’s a good thing. If you’re in the red, it’s costing more than it is generating. Compare everything you are doing, measure the short term vs. long term (always give preference to long term) and you’ll see how to move forward.