Conversion Rate - Leveraging the Most Important Metric in Web Advertising

Conversion Rate, also known as CVR is an essential metric every marketer must know as they work on online ad campaigns. Being the most crucial metric in digital advertising, it is necessary for us to look into the term and how it operates.
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At the end of this article, you will understand what CVR is, how to recognize its values, and most importantly, how to use it to enhance your ad campaigns. Make sure to read through the article as this is a must-read for web advertisers and digital marketers who want to improve their ad campaign’s conversion rate. 

What Is CVR?

CVR is the common abbreviation for Conversion Rate. It is a metric that is used to monitor the interaction between visitors and your website. It measures and analyzes the percentage of users who visit or interact with your website through an ad or web search. It considers target action with the website, which can be interpreted by "product purchase", "reservation", "document request", "contact," etc.

Even if a company can increase the number of visitors to its website, it will not be able to generate revenue if the visitors do not take the above-mentioned target actions. Therefore, it is necessary to measure the CVR value and operate the website together.

The Importance of Conversion Rate

So how do you actually leverage your knowledge of CVR? Here are some real examples. For instance, check the CVR for site A and site B below.

Site A: (Number of sales: 50) ÷ (Number of site visitors: 500) =10%

Site B: (Number of sales: 10) ÷ (Number of site visitors: 500) =2%

The example above shows that the higher the number of visitors Site A gets, the more it translates into sales. It also indicates that Site B must work on improving its CVR. It is, thus, not out of place to say that measuring CVR helps us understand the problem a page or a website has. 

Common Misconceptions Between CVR and CTR

Terminology Description
CVR (Conversion Rate) Percentage of accesses that reach the target
CTR (Click Through Rate) Percentage of ad displays that have been clicked

Marketers often confuse CVR as CTR. CTR is Click Through Rate, which measures the rate or percentage of clicks. On the other hand, CTR is a metric that is only concerned with the number of clicks an ad gets.

The interpretation is that a low CTR means something is wrong with the ad's content, or it is not delivered in a way that meets the audience’s expectations.

Understanding the Conversion Rate Formula

You can calculate CVR using this formula: 

[Number of CV ÷ Number of sessions x 100]
Ex. Number of site visitors: 1000, number of purchases: 17

(Number of purchases: 17) ÷ (Number of site visitors: 1,000) =1.7%

Average CVR: B2B sites = 10%, B2C sites = 3%. Also, note that CVR differs depending on the type of website and the industry in question. So we recommend that you should operate your website based on the average value as the target. 

Industry Percentage
Consulting Industry 10%
Publishing Industry 10%
Education Industry 8%
Medical Industry 8%
IT Industry (Software) 7%
IT Industry (Hardware) 5%
Manufacturing Industry 4%
Service Industry 4%
Tourism Industry (Travel) 4%
Retail Industry 3%
Non-Profit Organization 2%
Other 8%


Improving Conversion Rate for Ad Cost-Effectiveness

It is vital to highlight the problems a website faces as you calculate CVR because you will need to work on them. However, the question of making improvements arises when the conversion rate appears to be low. Below are some methods you can try to implement if you’re encountering low CVR.

Target  the Right Users

The primary aim of using online ads is to attract customers. So it is vital to confirm if you are targeting the right customers who need/want your products and services. For instance, you must target users who are also looking for what you sell. If you reach the wrong target audience, your ads may be shown to users who have no interest in your products or services. 

Although you may convince users to click your ads, it may not turn them into customers and this will eventually result in low CVR. So be sure to set accurate audience targeting in order to deliver your ads to the right people and avoid low conversion rates.

Enhance Your Landing Page

The landing page is typically the first page a user lands on when they click your ad. You can improve the quality of the landing page by taking measures such as lowering the bounce rate, posting reviews to solve users' questions, and optimizing the content to attract users. Improving your landing page will make it easier to connect with the users and you’ll be able to deliver your message to them better.

Before you fix the landing page, ensure you understand how the landing page behaves and the problems you need to fix. This gives you a clear-cut objective of what you’ll need to do to make it better.

Improve User Interface & Experience

You must stick to a good UI/UX design that will provide a better browsing experience to the user. Note that even just changing where the Contact Form button is located on your website can affect your CVR. So you must always ensure that your website is designed to make it easier for visitors to navigate and quickly get the information they want. 

Structure a PDCA Strategy

Setting up the measures mentioned above is not enough. Check for improvements by structuring a PDCA strategy and continually improving your workflow. 

The PDCA (Plan-Do-Check-Act) Cycle is a systematic approach where you conduct tests for possible solutions, review the results, and implement the ones that worked best.

Plan Set a specific target CVR. Then create a strategy to reach that target (your targets/changes should revolve around how to post and manage ads)
Do Ensure your ad campaign is within your advertising budget. Monitor the expenses incurred in your ad campaign.
Check Monitor and analyze any impact or changes between your former ad campaign and the results after the improvements you’ve taken.
Action Confirm if you have achieved your ad campaign’s goal. If not, check for the possible factors and make a new plan.

Ad Fraud may be the cause why your CVR is not improving

Despite all your efforts in improving your landing page, setting an accurate target audience, and implementing major changes on your website, you may still have low CVR. A possible reason why you’re experiencing this is you may be dealing with ad fraud without knowing it. Here is how ad fraud can negatively affect your CVR. 

What Is Ad Fraud?

Ad fraud is fraudulent activity on your ad which diverts your advertising costs and of course, results in a low conversion rate by making invalid impressions and clicks. There are many methods that fraudsters use to engage in fraud.

In 2019, Yahoo made a big statement when it suspended about 5,900 ads as a measure to counter ad fraud. This shows how severe and sophisticated fraud has become. 

Out of 627 billion data analyzed on 6/12/2020, about 3.95 billion yen is estimated to be the damages caused by ad fraud within six months in Japan. This means that you must take extra measures against ad fraud if you must run digital ads. Unauthorized clicks, fake impressions, etc., are all methods that can swallow your ad expenses. 

How does ad fraud work?

Ad fraud is identified in a few ways. Fraudsters can generate invalid clicks by impersonating real users and they can also build or use bots to reload web pages. 

Also, regular users can also aid in invalid clicks because their devices may be corrupted by a bot without them realizing it.

Ad fraud can appear in multiple methods, therefore it is essential to understand how they work. You must also monitor and analyze click influx, low conversion rate, and other abnormal behavior in your ad campaigns and block any attempt.

Final Notes

In this article, we explained how conversion rate plays an important role in your online ad campaigns and what methods you can take to improve them. If you’re already taking the steps we mentioned here but still not getting expected results, you may be experiencing ad fraud. 

If you’re in doubt whether you’re being targeted by ad fraud, feel free to sign up to Spider AF’s 14-day free trial to detect and identify the amount of fraud affecting your ad campaigns and how much budget you’re losing to them!

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