What is Conversion Rate in Digital Advertising?
The internet is a well oiled machine with clicks being the most basic action taken by a user. These clicks are essentially what keep the internet free by powering the digital advertising ecosystem.
When an ad creative is clicked, an ad call (a unique code giving information about the click) is sent to the ad server which leaves a digital footprint about the action. A cookie or pixel is usually dropped on the user so it can be tracked if they make a purchase. If the user then purchases or completes the desired action by the advertiser such as giving an email, phone number or filling out a form, a conversion is counted.
It it the goal of an advertiser to have a high conversion rate in order to generate a positive ROI (return on investment) from a given advertising campaign. To have a high conversion rate, the advertiser should be generating clicks from users who are relevant, engaged and actually want to buy the product or take an action based on the creative they have viewed.
As a student of digital advertising it is important for you to understand how to calculate conversion rate. Here is the easy to remember formula.
How to Calculate Conversion Rate Formula
How to Calculate Conversion Rate Example
Question If an advertiser has a digital advertising campaign with 500 clicks and 23 conversions, what would the conversion rate of this campaign be?
Answer: 23 divided by 500 equals .046 or 4.6% conversion rate.
Hopefully this advertiser locked in new customers with the conversions! It is important to always test different strategies to increase the conversion rate of potential clients.
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