Conversion refers to the number of people that actually bought a product or subscribed to a service.
In internet marketing, much emphasis is given on the traffic brought in by search engines. Businesses know that while traffic is great, if it does not lead to conversions, then it wouldn’t do the business any good.
To make marketing campaigns more efficient marketers gather and analyze data to get conversion rates. For example, clicks from banner ads posted on different websites are tracked and the number of the clicks that ended up in a conversion is counted. The conversion rate for banner ads is then computed as a percentage. Obviously high conversion rates mean good ads.
Aside from conversion rates, however, marketers need to take into account advertising cost. These means that more focus is given on applying strategies that can deliver maximum impact (high conversion rates) at minimum cost.
A good example would be a comparison of three internet marketing strategies: email spamming, pay-per-click ads (i.e. Adsense), and website sponsorships.
Email spam is the most cost effective but since indiscriminate spamming means very few interested people the conversion rates are really low. Of course, this doesn’t even take into account the better anti-spam filters in emails.
Pay-per-click ads, the other hand, have respectable conversion rates and are reasonably priced, depending on the keyword competitiveness.
Sponsoring a popular website can deliver really good conversion rates but can also be more expensive, which is why pay-per-click ads are very popular today.