What is a Conversion Rate?
A conversion rate is the percentage of users who complete a desired action.
It’s calculated by taking the number of people who completed an interaction (e.g. clicking on an advert), dividing it by the overall size of the audience and converting that figure into a percentage.
For example, an advertiser runs a mobile ad campaign on Facebook that reaches an audience of 10,000 people. Out of those 10,000 people, 400 click the advert. Therefore the conversion rate for the campaign is calculated as follows:
400/10000 = 0.04 or a 4 percent conversion rate
Why Are Conversion Rates Important?
Conversion rates are the simplest way to compare and contrast the performance of different advertising channels.
There is no single conversion rate that can be defined as “good” and applied across the mobile advertising industry. But by researching industry benchmarks, comparing them with the conversion rate of in-house advertising campaigns and looking across a selection of channels, advertisers can effectively analyze their performance and establish benchmarks.
This is particularly important when running mobile user acquisition campaigns. Conversion rate analysis can, when used properly, reveal which channels are most effective for promoting a particular app, help an advertiser to determine the effectiveness of their copy and use it to guide tactical and strategic decisions (e.g. improve the effectiveness of mobile video ad campaigns by hiring a full-time video editor).
Conversion rates can also be calculated further down the funnel. For example, it is possible to calculate what percentage of users who clicked an advert then went on to install an advert or complete an in-app action.
This is important for advertisers and marketers alike because it helps them to identify valuable users. This information can then be fed back into the funnel to aid targeting and optimize campaign performance.
Reference: “Adjust,” Retrieved – 23 April 2018