Basics
Conversion
A conversion is a valuable action that an advertiser wants people to take after seeing or clicking an ad, such as a purchase, sign-up, app install, call or form submission.
A conversion is the moment an ad "works" in measurable terms. Each advertiser defines its own: an e-commerce shop counts purchases, a bank counts account applications, a game counts installs or first purchases, a B2B company counts demo requests.
Conversions are recorded by a tracking pixel, an app SDK or MMP, or server-to-server via a Conversions API, then linked back to ads by attribution rules. Click-through conversions follow a click; view-through conversions follow an ad view without a click, within a set window. Conversion rate is conversions divided by clicks (or visits), and conversions divided into spend gives CPA.
Conversions are only as trustworthy as the tracking. Duplicate firing, generous attribution windows and fraud such as install fraud, lead generation fraud and click injection can all inflate conversion counts. Incrementality testing asks the tougher question: how many conversions happened because of the ad, rather than merely after it?
Think of it like this
A conversion is the till ringing: the moment a browser in the shop becomes a paying customer.
An example
A campaign drives 10,000 clicks and 250 purchases. Conversion rate = 250 ÷ 10,000 = 2.5%; with a spend of US$5,000, CPA = US$20.
Related terms
CPA (cost per acquisition)
CPA (cost per acquisition) is the average advertising cost of getting one desired action, such as a sale, sign-up or app install, and also a model paying only for those actions.
Attribution
Attribution is the process of assigning credit for a conversion, such as a sale, sign-up or install, to the ads, channels or touchpoints that a customer encountered beforehand.
Landing page
A landing page is the web page (or app screen) a person arrives at after clicking an ad, designed to convert that visitor into a buyer, sign-up or lead.
View-through conversion
A view-through conversion is a conversion credited to an ad that the person saw but did not click, when they convert within a set time window after the impression.
Conversions API (server-side tracking)
A conversions API sends conversion events, such as purchases or sign-ups, directly from an advertiser's server to an ad platform, instead of relying only on browser pixels.