Conversion potential: a metric for evaluating search engine advertising performance

Abstract

Purpose This research is based on the premise that current metrics for search engine advertising (SEA) are misleading and do not sufficiently allow managers to evaluate traffic and conversions simultaneously. This study aimed to conceptually develop and assess conversion potential (CvP) as a unifying construct for both measuring and evaluating the performance of SEA campaigns. Design/methodology/approach A data set of nearly seven million records covering almost three years of a multi-million-dollar keyword marketing campaign from a major US retailer was used to validate the construct of CvP. Findings Results empirically validate how CvP measures both campaign traffic and sales in SEA, using the optimization factor of ad rank, which is one of many possible factors. Research limitations/implications Although the data set is large and covers a lengthy period of time, it is limited to one company in the retail sector. Practical implications The research instantiates CvP as a metric for overall SEA account performance while demonstrating that it is a practical tool for future campaign planning. The metric simultaneously incorporates a sales ratio and a traffic ratio. Originality/value This is the first study to formalize and provide a working definition of CvP in the academic literature. The contribution is a theoretical and practical managerial framework to mutually evaluate, measure and make decisions about SEA efforts.