Conversion Rate (CVR)
Conversion rate in relation to advertising is an important marketing metric that indicates how many users who saw or clicked on an ad actually performed a desired action, such as a purchase, registration or enquiry.
How is the conversion rate calculated?
The conversion rate is calculated by dividing the number of desired actions by the total number of people reached or clicks on the ad and multiplying the result by 100. For example, if an ad was seen 1000 times and 10 people bought a product after clicking on the ad, the conversion rate is 1% (10/1000*100 = 1%).
A high conversion rate is an indicator that the advertisement is effective and appeals to the target group. In order to optimise the conversion rate, different strategies can be used, such as optimising landing pages, adapting the advertising message or testing different ad formats.
How relevant is the conversion rate?
Conversion rate plays a crucial role in evaluating the effectiveness of an advertising campaign. It allows marketers to measure the success of their efforts and analyse how well their messages and ads are resonating with the target audience. A low conversion rate may indicate that improvements in the advertising message, the design of the ad or the user experience are needed to encourage the desired actions from users.
It is important to note that conversion rates can vary greatly depending on the industry, product type and target audience. For example, a 5% conversion rate for an online shop selling expensive electronics may be considered successful, while the same rate for a website offering free resources may be considered less impressive.
The conversion rate can also provide revealing insights into the behaviour of the target group. By analysing which promotional activities lead to higher conversion rates, marketing strategies can be refined and personalised approaches developed to further increase efficiency. A/B testing, where different variations of the same ad or landing page are tested, is a popular method to find out which elements influence the conversion rate.
However, it is important not to look at conversion rate in isolation. It should always be seen in conjunction with other metrics such as return on investment (ROI) and customer lifetime value (CLV) to get a comprehensive picture of the performance of an advertising campaign. Ultimately, the conversion rate is a valuable tool to analyse and optimise marketing strategies and ultimately increase the success of a campaign.