What is conversion rate?

Conversion rate (CVR/CR) is the percentage of users who take a desired action, like purchasing a product, after clicking on an ad. Optimising Catalog Ads for high CR involves better visuals, targeting, and mobile loading speed.

How do you calculate conversion rate?

To work out your conversion rate, you divide the number of conversions by the total number of ad interactions. Then, you multiply this answer by 100 to express it as a percentage. 

For example, if 1,000 people clicked on your ad and 100 of them bought a product, your conversion rate is 10%. 

Why is conversion rate important in e-commerce?

Your conversion rate is one of the most important indicators of whether or not your ads are effective. In short, it reflects how well you manage to turn impressions and interaction into customers. 

A high conversion rate is a good indicator that your content is well-targeted and persuasive. 

Aside from directly impacting your revenue, it also improves your ad campaigns’ return on investment ( ROI). By improving your conversion rate, you can increase your sales without having to attract more clicks. This means that your cost per acquisition (CPA) decreases, making your marketing and ad strategies more profitable. 

Which factors can impact your conversion rate?

Call to action (CTA)

A strong, visible, action-oriented CTA helps guide users toward conversion. Put simply, it tells shoppers what they should do next. If the language is unclear, it will cause confusion which can lead to hesitation. 

Pricing

Discounts, promotions, limited-time offers, and free shipping offer incentive for shoppers to act (and fast). Not only should your pricing be attractive, but also clear. Transparent prices help to filter out unqualified traffic, helping you to attract more high-intent clicks. 

Trust signals

Elements like positive reviews, security badges, high-quality product photos, and a clear return policy help build brand confidence and credibility, while reducing friction and perceived risk. Shoppers are more likely to convert when they see others have purchased successfully and are happy with the product. 

Relevance and targeting

If your ad speaks to your audience’s needs and pain points directly, they’re more likely to take notice and click on it. Then, with precise targeting, you’ll ensure that your ad reaches the right audience (in other words, shoppers who are actually interested in your product and more likely to convert). 

Best practices in measuring conversion rate

Choose specific conversion goals

Conversion typically refers to a completed purchase, but it could also be, for example, an email newsletter sign-up or app download. Let your campaign type guide you when you choose how you’ll measure conversion. For example, if you’re running a top-of-funnel (TOFU) ad to build brand awareness, generating more newsletter sign-ups will be solid conversion goals. 

Track conversions across devices

Limiting your tracking to same-session, same-device conversions will prevent you from seeing the real picture. As shoppers often jump from mobile to desktop or vice versa, it’s best practice to use cross-device tracking capabilities which will give you a comprehensive view of the user journey. 

Segment your data

In addition to looking at device type, it’s also a good idea to break down your data using factors like: age, gender, location, and ad placement. This step will help you to identify your best-converting segments, helping you to zoom in on these groups and/or optimise your ads targeting the underperforming segments. 

Use benchmarks and historical data

As conversion rates can vary significantly across industries, it’s best to measure your performance against industry benchmarks. Then, also use your own past performance so that you can track if you manage to improve your ad performance continuously. 

A/B test creatives and landing pages

Testing variations of headlines, CTAs, messaging, layouts, etc. will allow you to identify the versions that generate the best results. You can then combine, for example, the best-performing headline, layout, and CTA to create one super ad.