Why You Must Track “Qualified Leads” in Google Ads
Google Ads lead generation is about, well, getting leads. But not all leads are created equal. If you want more high-value leads, then you must track “qualified leads” in Google Ads.
First, some definitions:
- “lead“: a person who has contacted your company about your service or product. They do this through a website form, phone call, email, chat, etc.
- “raw lead“: a lead that you have not yet qualified in any way. It’s the same as a “lead”, but it’s useful to emphasize the “raw” status.
- “qualified lead“: a lead that has passed some meaningful threshold of value for your business. This is the type of lead you want.
Why would a “raw lead” not become a “qualified lead“? There are several possibilities:
a) The person understood your service, but they aren’t a good fit for it
b) The person misunderstood your service, but they contacted you anyway (common)
c) The person is spamming you or wasn’t a person at all (all too common)
How does a “raw lead” become a “qualified lead“? Maybe you spoke with the person on the phone. Maybe they have the right title. Maybe they are looking to spend the right amount of money. Maybe they answered your form questions the right way. Maybe your sales team vetted them. One way or another, you have determined that these leads are more valuable to your business. They are more likely to become good customers.
Depending on many factors, perhaps only 10% to 30% of the “raw leads” you receive will become “qualified leads“.
How does all this affect your Google Ads campaign performance? And how does tracking “qualified leads” improve performance? Let’s build the story from the ground up.
Level -1 (Red Alert):
You don’t track Conversions in Google Ads
A “Conversion” in Google Ads is a meaningful action taken by someone who clicks your ad. For lead generation you want your campaigns to bring you Conversions at a reasonable cost.
If you don’t have “Conversions” configured in your Google Ads account, then you aren’t doing lead generation. Or at least you have no idea where you are spending your money well, where you are wasting it, or what your ROI is. You are just firing ads in the dark. Fix that first!
Level 0 (Newbie):
You track “light actions” as Conversions
Perhaps you are tracking pre-lead actions as “Conversions”. These “light actions” might be viewing a certain website page, or viewing a certain number of pages, or clicking a certain link. This tracking can have its place, but alone it is insufficient for lead generation. What you track as “Conversions” is what you get more of in Google Ads. You don’t want more page views. You want more leads!
Level 1 (Beginner):
You track “raw leads” as Conversions
Now you’re getting somewhere. Now at least you can optimize your Google Ads campaigns for getting leads.
This is where most advertisers stop. It’s easy to track “raw leads“, and it can seem like it’s good enough.
For a small number of businesses, this level of tracking can indeed be fine. Perhaps each lead you receive has roughly equal value to your business. And perhaps each lead has roughly equal chance of turning into a customer. If so, then there is no need for further distinction. Just get as many “raw leads” as you can with your Google Ads campaigns. All is well!
But for most businesses, leads are not equal. Some are spam. Some are a poor fit. Some are low value. Obviously, you want to spend more money and effort going after the leads that bring you good customers.
This is where things start to go wrong in many Google Ads accounts. To see why, ask yourself:
Is it easier for Google Ads to bring us low-value leads or high-value leads?
The answer should be obvious. Low-value are are cheaper and easier to get because:
a) There are many more of them available
b) There is less competition for them
When you push your campaigns to bring you more Conversions at lower cost, what will happen? Remember that with this Level 1 tracking Google sees all “raw leads” as equal value. Since low-value leads are cheaper and easier to get, Google will naturally give you more low-value leads.
This problem goes beyond automated bidding. There is no data available within Google Ads to help you distinguish lead value. As a result, you can’t even apply your own intelligence to make the campaigns perform better.
Level 2 (Advanced):
You track “Qualified Leads” as Conversions
If you configure your Google Ads Conversions to track “qualified leads“, then the world changes for you.
Now you can see which campaigns and ad groups bring you the most “qualified leads” at good CPA. You can shift more budget and priority to those.
Now you can see which search queries, locations, devices, audiences, etc. waste most of your money. You can de-emphasize or exclude that targeting.
You can do all this manually. Or you can use the Google Ads Smart Bidding algorithms “Maximize Conversions” or “Target CPA”. (See “AI for Google Ads Lead Generation” for information about AI-based bidding.) With either approach you now have much better data to work with.
You point your advertisting efforts in the right direction by tracking “qualified leads” in your Google Ads account.
Yet something is still missing. What about ROAS (Return on Ad Spend), which is the Google Ads measure of ROI? You can be confident that it must be higher than when you were tracking only “raw leads“. But you can’t yet measure it or work to maximize it.
Level 3 (Master):
You track “Qualified Leads” as Conversions and assign Conversion Values
Google Ads lets you assign an appropriate conversion value to each “qualifed lead“. In doing so you will have value information available directly within the Google Ads account. You can now calculate ROAS and optimize your account for the highest value leads.
While “qualified leads” are clearly better than “raw leads“, they can also have different value. Some “qualified leads” might be worth $1,000 to your business while others might be worth $100,000. Don’t you want your campaigns to work hardest to bring in those higher value leads?
With conversion value data available, you can now focus your account on generating value. You can use the most comprehensive Smart Bidding algorithms of “Maximize Conversion Value” or “Target ROAS”. As the names suggest, the goal is no longer to get a certain quantity of Conversions at a certain cost. Now the goal is to get a certain value of conversions at a certain cost.
This is where you want to operate your advertising campaigns. After all, the most important advertising goal for most businesses is to drive profitability. Level 3 tracking — “qualified leads” plus conversion value — finally lets you do exactly that.
Tactical caveats:
- If you have only a handful of “raw leads” per month, it is difficult to make your campaigns perform well. This is especially true with automated “Smart Bidding”. This problem gets worse if you focus on an even smaller number of “qualified leads”. Such a case usually requires a hybrid Conversion approach and careful manual optimization.
- Be wary of Performance Max campaigns, Display Campaigns, and the Search Partners Network. They tend to yield the most low-value leads, especially when pushed. If you track only “raw leads”, you should use only Search campaigns and target only the Google Search Network.
Now that you’ve decided that you need to track “qualified leads” in Google Ads, how do you do that? It requires some special setup as well as ongoing effort.
Well Summarized. I have a slightly different take on the “Level 3 (Master)” point though.
I’m apprehensive about letting Google know the “true” value of a converted lead!
Rationale:
There are multiple services wherein the AOV can be in tens of thousands in B2C (or even hundreds of thousands of dollars in B2B)
The value of the DQ (Double Qualified) lead in itself in such cases can easily be in thousands of dollars.
If we let Google know the ‘true” value in such cases, AI algo would simply recommend increasing the TCPA (gradually) till it approaches the true value (read thousands of $).
I prefer to hold the system to much stricter TCPA targets than the true value and force it to produce leads with a comfortable headroom on the upside.
Hi Yatin,
Thank you for the thoughtful comment. I think setting appropriate ROAS targets and/or conversion values would let you avoid the situation you outlined. You could set conversion values below “full value” so as not to overly bias the algorithm. Or you could avoid tracking conversions too deeply into the Sales funnel where values increase greatly. Or you could ratchet up the ROAS targets to appropriately compensate for actual conversion values. Those approaches should keep CPAs under control while still letting the algorithm leverage valuable revenue data.
One thing I remind clients of is that these particular numbers in Google Ads need not accurately reflect reality. Sometimes it can be configured such that the directly calculated ROAS is a meaningful business number. But more often than not these values are just optimization levers. We set conversion values and ROAS targets in order to maximize campaign performance for the business. Their actual values may or may not track resulting business metrics, and that’s OK.
On the other hand, if there’s no good correlation between a particular type of lead and its eventual revenue, then there is no need to add conversion values. Just use Target CPA bidding and keep it simple!