For comparison, let's look at Quality Score, which has often been described as the most effective way to manage cost per conversion. Using the AdWords accounts with a cost per click of $1.00 from our previous example, here's how the cost per conversion varies by impression-weighted Quality Score. Quality Score does not predict cost per conversion Looking at this graph, it seems like a pretty direct correlation: as the Quality Score goes up, the cost per conversion goes down. Advertising Continue reading below In fact, our results are surprisingly similar to those reported by Larry Kim. If your Quality Score increases by 1 point, your cost per conversion decreases by 13% (Larry puts it at 16%).
If your Quality Score decreases by 1 point, your cost per conversion increases by 13%. Or does it? Although a model based on the image masking service quality score looks nice on paper, it only explains 1.2% of the variability in the data (R 2 = 0.012). In other words, there's only a 1.2% chance that improving your Quality Score will improve your cost per conversion by 13%. The rest of the time, you don't know how changing your Quality Score will affect your cost per conversion. If you think about it, it all makes sense. If 76% of your ad spend is wasted on bad search terms, tweaking your ad content or landing pages to boost your Quality Score a few points won't make much of a difference to your cost per conversion.
On the other hand, if most of your ad spend goes to the right search terms, a higher Quality Score will lower your cost per click and, therefore, your cost per conversion. Advertising Continue reading below Use of this data Fortunately, understanding how wasted ad spend affects your AdWords account performance gives you a leg up on the competition. Once we discovered how wasted ad spend affects AdWords campaign performance, we made reducing wasted ad spend a key part of managing our clients' AdWords accounts.