If you are an experienced Adwords manager, you probably had clients that want bigger market share, lower cost per conversion or just want best value for their budget (Not to mention all the crazy goals, like top ranking for the keyword the CEO mentioned).
As a Adwords expert your main focus is to improve the Adwords account. The improvement can either be used to get a bigger market share or lower cost for the same market share (or both).
Part one: Relationship between market share and price per conversion
This is what confuse many, in relationship with general improvement.
If we assume linear connection between price per conversion and market share, we get the following graph.
If you increase you bids, you will have to pay more per conversion, but you also get a higher market share. And your market share will decrease, if you lower your bids, together with your market share.
Part two: What happen when you improve your Adwords account?
You switch the line down.
Your client can choose to keep that same market share and get a lower cost per conversion or keep the same price per conversion and get a bigger market share. Most of my clients choose something in between, but any prices per conversion gives a market share.
Part three: How do you improve the Adwords-account and what does it cost?
Now you can explain what you can do to improve the Adwords account and what it cost.
If you charge a fixed percent for Adwords management you can illustrate it like this:
If you start in (S,A) and improve the Adwords account, the new line moves down. Now your client can choose more conversions for the same price per conversion (T,A) or the same number of conversions for a lower cost per conversion (S,D), or anything else on the new line. If there are a change in cost for Adwords administration, you need to account for that.
Disclaimer: As most experience Adwords-managers know, the relationship between price per conversion and market share isn’t linear. There are to many factors that influence the shape, but I believe that most Adwords managers know the connections: When you increase bids, you start paying more per conversion and get a bigger market share (except in some rare cases).