Google Conversion Tracking: Pros and Cons

Hi guys,

I am just back from Google Geek Night in Singapore.
I must say Well Done! with the logistic work: a lot of people turned up for the event, plenty of good food and drinks. I ‘ve had the opportunity to catch up with many Googlers, whom i normally communicate through phones only even though our offices are only 10 minutes apart.

Basically, Google’s intention of organizing this kind of event is to educate advertising agencies in Singapore, which is absolutely great!
This is exactly the kind of activity that Google should do as the market leader in Search.

Google also organizes a series of training ranging from Basics to Adwords, to Google Analytics and how to use Adwords Editor this week as well. So all good stuff!

Coming back to the topic of today’s post, the pros and cons of using Google Conversion Tracking (as a stand alone solution or by using Google Analytics).

Google Conversion Tracking and Google Analytics are FREE

Let’s start with the pros first:

  • Google conversion tracking is FREE.
  • Normally people use Google Analytics, not just Conversion Tracking from Google since Google Analytics is free as well
  • It’s a good tool if you are new to Web Analytics and if you don’t need to do too much Analysis
  • It incorporates Google Adwords so you know straight the way what your Return on Ad Spend is etc…
  • Easy to implement
  • Custom Dashboard for Google Analytics
  • Internal Site Search analysis capability for Google Analytics
  • Benchmarking with Google Analytics: This is really important because you want to know how you are doing relatively in your industry
  • etc….

Basically if you are new to Analytics then i would recommend you give Google Analytics a try before moving on to more advanced (and normally costly) Analytics Solution.
The idea behind having a metric is not to overload yourself/your managers with data but rather to understand where things are and more importantly if you can take any action to make things better. Please refer to my post for more details

Now the Cons:

Before moving on, i would want to state again that this is totally my personal opinion, based on my own personal experience and understanding.

While i vote for the use of Google Analytics for newbies or if you don’t need to do a lot of in-dept analysis then Analytics, I strongly advise against the use of Conversion Tracking/E-commerce Tracking by Google in the long run.

Here are why:

  • We all know Google is amongst the top brands in the world, if it’s not the No. 1 brand already
  • Google still continues t innovate at an incredible speed for such a big company. We, end-users, benefit tremendously with Google Search, new applications etc…
  • Google provides one single Global platform to cater to all of advertisers’ needs, from Direct Response to Branding etc…
  • The number of end users using Google as their preferred Search Engine increases gradually across all markets.
  • Not only Google provides an Advertising Platform, it also provide ways to track the effectiveness of your Advertising dollars for FREE. However, in the long run, it’s a very bad thing for Advertisers.

Buyers and Sellers dilemma

  • Let take an example, a normal buyers and sellers scenario: Buyers will always want to buy stuff at cheaper price and Sellers will always try to sell at the highest price possible. And how sellers determine how much the highest price they can charge buyers to earn Maximum profit and still have a lot of Customers ???

Well, that’s really an art and Marketing Department, Sales Department and other departments of every single company are trying to determine that magical balance between how much they should charge their customers while still keep them happy.

Google has found a way….

Google money making product is their Marketing platform where they either charge advertisers by Click (Cost per Click) or by Impression (CPM) or by Acquisition (CPA).
Whether it’s CPM or CPA, it all boils down to the value of a click.

Google (just like any other Media Owner) faces the problem of deciding how much to charge for a single click it delivers to maximize the profit and at the same time make advertisers happy.
Well if only Google knows how much advertisers in each vertical, in each country, region make out of every single dollar they spend online. In other words, if only Google knows exactly what advertisers Return on Ad Spend is.

Conversion Tracking is the key

With Conversion Tracking (which is a free feature inside Adwords or Google Analytics), Advertisers willingly letting Google ( A Media Owner or Sellers in this case) know how much they make by using Google service. While Google claims that they only record data anonymously across the markets, the fact remains that Google will potentially know exactly how much a normal advertiser makes in a specific vertical/industry in a specific region/country.

By knowing this figure, Google can play with its minimum bid price BINGO!

For those of you who don’t know what minimum bid price is, it’s basically the minimum price that Google system sets for each keyword. It’s different keyword from keyword, from city to city etc… The minimum bid price depends on Quality Score. The higher your Quality Score is (in other words, the more relevant your ads is by Google’s judgment, the lesser your Minimum bid is.
If Advertiser want their ad to be active for Search, which basically means the ad can be potentially shown, they need to set the Cost per Click or CPC higher than the Minimum CPC decided by Google.

At the end Google is a publicly traded company

So in the long run, what happens is that Google has been raising its minimum CPC steadily in order to earn more profit. I personally experience this even with SouthEast Asia region. The min CPC for verticals like Finance is very high now.
Google can safely increase the min CPC across the board is because with more Advertisers using Google Analytics and more importantly Conversion Tracking/E commerce Tracking, Google knows HOW MUCH advertisers are marking per click or what the maximum amount Advertisers are most willing to pay to use Google.

In the buyers and sellers example above, it’s like Buyers let Sellers know how much they are willing to pay for the Service and Sellers just charge the Max amount that they see fit.

  • It’s even more dangerous with the use of Google Analytics across multiple sites. So now Google not only know how much they should charge for a click on the google.com site but also across hundred of thousands of sites in its Content Network.
  • About a year ago, Google launched CPA program in SouthEast Asia. This is basically a program where Advertisers tell Google exactly how much they are willing to pay for an action/acquisition and Google will try to deliver that to Advertisers through its Content Network/Affiliated Publishers. This is basically Affiliate Marketing. While Advertisers love this product because they only pay for a sales or a booking. It’s potentially very dangerous in the long run because Advertisers are not dealing with a third party here but with the BIGGEST Media Owner directly.

Well, that’s about what i have to say for the time being. While i still think Google is a great company, (there is little doubt about it) i am not 100% behind the idea of using Google Analytics and Strong against the use of Google Conversion Tracking for the benefits of Advertisers in the long run!

Feel free to share your thoughts/opinions.

Thanks,
Chandler

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