Cost Per Conversion is a cost-efficiency metric used by digital marketers when analysing how well different campaigns and channels are driving conversions. It measures the average cost of one conversion, and is calculated by dividing ad spend with the number conversions attributed to a channel or campaign. "Conversion" is typically defined as a purchase made in an eCommerce store, but it can also be defined to mean lead form submission, newsletter sign-up or other user actions benefitting the business.
Cost Per Conversion = Advertising Spend / Number of Conversions.
If your advertising spend is $10,000 and you receive 5,000 conversions, your Cost Per Conversion is $20.00.
| Advertising spend | $10,000 |
| Number of Conversions | 5,000 |
| Cost Per Conversion | $20.00 |
Compared to simpler cost-efficiency metrics, such as Cost-Per-Click or Cost-Per-Mille, measuring Cost Per Conversion requires more advanced technical implementation, and has in-built assumptions related to attributing conversions that are important for the digital marketer to understand.
In order to track conversions, the advertisers has to have the advertising platform's tracking method, typically called "tracking pixel", in use. Tracking pixel sends conversion events back to the ad platform, enabling the ad platform to attribute conversions to campaigns.
When attributing conversions to campaigns, ad platform use attribution rules. As an example, a typical setup in Google Ads is to attribute a conversion to a campaign, if a person clicked an ad within the last 30 days. Attribution setting, including the attribution window, can often be adjusted by the advertiser.
The most convenient way to track Cost Per Conversion across your whole digital mix, including all advertising platforms, advertising channels and campaigns, is to use a measurement solution like Sellforte. Platforms like Sellforte consolidate all digital data into one platform, and pre-process the data for convenient analysis (for example conducts campaign grouping). Below are examples of tracking views from the Sellforte demo.
Ad Platform-level Cost Per Conversion analysis:
Advertising channel -level Cost Per Conversion analysis:
Cost Per Conversion is one of the efficiency metrics in the Media Metric funnel. Media Metric funnel is an abstraction of consumers' buying journey:
In this funnel, Cost Per Conversion is an efficiency metric for Conversions. Other similar efficiency metrics in the funnel include Cost Per Mille (CPM), Cost Per Click (CPC), and Return On Ad Spend (ROAS).
Cost Per Conversion can be used in digital media buying, as well as in analyzing performance of digital advertising.
Cost Per Conversion should not be confused Cost Per Click. Both are sometimes referred to as "CPC", but in most contexts CPC refers to Cost Per Click.