Conversion is needed to estimate the efficiency of advertising campaigns. Let's see what conversion is and how to calculate it.
In Wikipedia you can find several variants for determining the conversion in the context of psychology, linguistics, microbiology, etc. However, we are interested in what is the conversion in Internet marketing.
In Internet marketing a conversion is a proportion of visits on your site during which visitors perform a targeted action.
The target action may include adding a product to a shopping cart, visiting a specific page of the site, receiving an application through a feedback form, obtaining a lead (moving to a site from advertisement), buying a product, and so on.
At each stage of the sales funnel, the conversion can be different.
For example, if your ad was seen by 1000 people. After that, 600 people proceeded to your site. A conversion can be the ratio of ad impressions to the number of clicks (conversions) on it. In this case, if you set a goal to visit the site, the conversion rate will be 60%. In order to increase the conversion rate at this stage of the sales funnel, you need to create a quality and relevant ad.
Out of the 600 people who proceeded to the site, 200 of them submitted an application. In this case, submitting an application will be considered a conversion. After those 200 people submitted an application, only 20 of them went on to make a purchase. Submission of an order and purchase of goods is a conversion of a visit, that is, the ratio of targeted actions made by a user on your site to the total number of visits. The result shall be multiplied by 100%. We calculate the conversion: 20/200 * 100% = 10%.
Calculate the conversion from those who saw the advertisement, in those who bought the goods:
The conversion rate shows how your advertisement and your site’s performance matches your business goals.
Calculating the conversion rate, you can see if the cost for sale of goods/services is within budget.
If we talk about online advertising, you need to monitor which channels bring you more conversions and cut off those that bring little or do not bring at all.