Conversion Rate is a metric used in assessing the performance of digital advertising. Conversion Rate measures the percentage of website visitors making a purchase. Conversion Rate for a campaign is calculated by dividing the number of conversions attributed to the campaign with the number of website visitors attributed to the same campaign.
A high Conversion Rate indicates that the campaign is reaching an audience for which the products are relevant and appealing. On the other hand, a low Conversion Rate suggests that the campaign requires improvement, for example in targeting or creative content.
Conversion Rate Formula
Conversion Rate = Number of conversions attributed to a campaign / Number of eCommerce store visitors attributed to a campaign.
To arrive at a percentage, one can multiply the number above with 100%.
Example Calculation for Conversion Rate
If a campaign delivered 10,000 visitors and 500 of them made a purchase, the Conversion Rate of the campaign is 5% .
| Number of Conversions (attributed to a campaign) | 500 |
| Number of Website visitors (attributed to a campaign) | 10,000 |
| Conversion Rate (of a campaign) | 5.00% |
How are Attributed Conversions Measured?
Measuring Conversion Rate requires more advanced technical setup, compared to tracking simpler digital advertising metrics, such Impressions or Clicks, because the calculation requires attributing conversion and visitors to specific campaigns or ads. Attribution requires assumptions that are important for the digital marketer to understand.
Conversion tracking requires that the advertisers has implement advertising platform's tracking method on their website, often called "tracking pixel". Tracking pixel enables sending users' conversion events to the advertising platform, making it possible for the advertising platform to connect conversion events with campaigns.
For attributing conversions to a campaign, ad platforms use attribution rules. For example, Google Ads often has a default setting for attributing a conversion to a campaign, if a person clicked an ad within the last 30 days. Attribution settings, including the attribution window, are typically open for advertisers' adjustment.
How Is Cost Per Conversion Rate Tracked?
Conversion Rate is not used as often as CPC or CPM, and analyzing it with an advertising platform's tools might require customizing dashboards of the platform.
The easiest way to track Conversion Rate across all platforms, is to use a modern media measurement tool, such as Sellforte, which automatically consolidates all digital data into one platform and processes it for easy analysis. Below is an example of advertising channel -level tracking view from the Sellforte demo.
Conversion Rate in the Media Metric funnel
Conversion Rate is a performance ratio in the Media Metric funnel. Media Metric funnel is an abstraction of consumers' buying journey:
- Impressions measure how many people saw the ad
- Clicks measure how many people clicked the ad
- Conversions measure the number of purchases made by people clicking the ad (within a certain attribution window)
- Conversion value measures the total value of purchases made by people clicking the ad (within a certain attribution window)
Cost-efficiency metrics in the funnel include: Cost Per Mille (CPM), Cost Per Click (CPC), Cost Per Conversion, Return On Ad Spend (ROAS).
Performance ratios in the funnel include: Click-Through Rate (CTR), Conversion Rate, and Average Order Value.
How is Conversion Rate used by Digital Marketers?
Conversion Rate is used by digital marketers in following use-cases:
- Effectiveness Measurement: Digital marketers can compare Conversion Rates of different ads, campaigns and channels to evaluate how well they are driving traffic that has a high likelihood to convert. A low Conversion Rate indicates challenges in the creative, audience targeting, and other campaign parameters.
- ROI deep-dive analyses: When analyzing why ROI of a channel or campaign has increased or decreased, digital marketer can analyze whether a change in Conversion Rate could be an explanatory factor for the increase / decrease.