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Metrics
Average order value is total revenue divided by the number of orders over a period, showing how much a typical customer spends per transaction.
AOV shapes everything in e-commerce advertising math. A store with a high AOV can afford a high cost per order and still hit its ROAS target; a store with a low AOV needs cheap conversions or high repeat purchase. Changes in AOV also explain ROAS movements that campaign changes did not cause: a promotion that increases order size lifts ROAS with no change to the ads.
In Google Ads, AOV can be read from conversion value divided by conversions when purchase tracking carries value. Segmenting it by campaign or product tier shows which traffic buys big and which buys small, which often argues for different ROAS targets per campaign rather than one account-wide number.
AOV is also a lever, not just a measurement. Bundles, free shipping thresholds, and post-purchase upsells raise it, and every increase makes the same ad spend more profitable without touching a bid.
Why it matters
It sets how much you can afford to pay for a customer, and it is one of the cheapest levers to move.
RELATED TERMS
ROAS (Return on Ad Spend)
ROAS is revenue attributed to advertising divided by the cost of that advertising, expressed as a multiple such as 5x or a percentage such as 500%.
LTV (Customer Lifetime Value)
Customer lifetime value is the total revenue or profit a customer is expected to generate over the whole relationship, not just the first purchase.
CPA (Cost Per Acquisition)
Cost per acquisition is total ad spend divided by the number of conversions, giving the average cost to produce one defined outcome such as a sale, lead, or sign-up.
Written by Ilya Bulychev, Founder, Live PPC Ads. Part of the PPC Glossary.
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