Running a pay-per-click (PPC) campaign is hard work. You need to find relevant keywords, write and prepare compelling ads, target the right audience, decide on budgets and bids.

It takes time, effort and perseverance to do it right and get great results. And when we say “great results” we mean “conversions”, not just clicks. That’s because the real end game isn’t to just get clicks but to move prospects to the next step and do what you want them to do (we call this “converting” in the marketing world).

While conversion rates aren’t the only metric you need to measure, it’s one of the strongest indicators of your ad’s performance.

But what exactly is a conversion rate, why does it matter and how do you calculate yours? In this post we’ll answer these questions and more so you know whether your ads are performing well or if they need more work.

What are PPC conversion rates?

Let’s start with the basics so you understand what “conversions” are.

Conversions are the actions you want users to complete after clicking your ad. While this can mean sales, other common examples of conversions include:

• Signing up for a newsletter or subscribing to a blog
• Downloading a resource like an ebook, a checklist or an app
• Emailing or placing a phone call
• Filling out a form to ask for a quote
• Registering for an event or a webinar
• Signing up for a free trial
• Registering for an account on your site
• Upgrading their service

This should give you a feel for what a “conversion” is. In simple words, it’s a measurable action that moves a potential customer towards becoming a paying customer.

Of course, there are lots more conversion actions that people can take on your site, depending on your goals.

When it comes to PPC campaigns, a conversion rate is the percentage of users that convert on your ads, meaning they do what you want them to do.

Why do they matter?

Your PPC conversion rates can help you to determine whether your ad campaigns are successful at getting people to take the action you want them to take, or if you need to improve it.

For example, if you notice that your ads have a high click-through rate (meaning lots of people click on your ads) but a low conversion rate (meaning very few people take the next step once they’re on your site), this is a sign that something’s off.

There are lots of things that can prevent visitors from converting. These are the most common:

1. There’s a disconnect between your ad and the page you’re sending visitors to. If you’re promoting a specific product or service in your ad but are sending prospects to your homepage, that’s a problem. Why? Because you’re wasting people’s time by forcing them to look through your entire site to find the product or service they saw in your ad. That’s not good customer experience so don’t be surprised if they choose to immediately leave your site. Remember to always link your ad to the product or service page you’re mentioning in the ad.
2. Your landing page is weak. If your landing page is cluttered, confusing, or spammy, if it’s missing a clear, powerful call-to-action button, users will quickly lose interest. Make sure your landing page is simple, clear and enticing in terms of design, navigation and copy. Find out what other landing page mistakes might be costing you sales, and how to fix them.
3. It’s taking forever for your landing page to load. Did you know that just a one-second delay can lead to a 7% loss in conversions? Page speed is very important so make sure you take measures to improve yours and keep prospects on your site. Use the tips and advice in this post to get your site up to speed.

How to calculate your PPC conversion rate

It’s simple. All you have to do is to divide the number of conversions you got in a given time frame by the number of users who clicked on the ad during the same period. Then multiply it by 100.

Conversion rate = (conversions / total visitors) x 100

For example, if your site had 15 conversions from 500 ad clicks, your conversion rate would be 3%.

Now, if you set up your tracking right, Google AdWords and Google Analytics can show you your conversion rate right in your dashboard so you don’t have to calculate it yourself.

One important thing to keep in mind when calculating your conversion rate is the quality of your data. For example, if your traffic sample is small, it’s hard to trust the results.

So if 10% of ten people convert on your site (meaning just one person), does that mean your ad campaign is performing well? Not necessarily.

That’s why we’d recommend you to use a sufficiently long timeframe when tracking your conversion rates before you come to any real conclusions. If you usually only get a few hundred visitors a month, it may longer to get a feel for your conversion rate.

What’s a ‘good’ conversion rate?

The truth is that it varies depending on your industry, business, what you’re selling and even the specific conversion action you’re tracking.

But if you’re curious to see how you stack up against industry averages, check out the data provided by Search Engine Watch. They state that most conversion rates range from 0,5% to 3%. Surprised?

Here’s the thing: while there are lots of other conversion rate statistics out there, what qualifies as a good conversion rate for you will ultimately be specific to your business and ad campaign.

How to track your conversion rates

To calculate your conversion rate, you need to be tracking conversions. You can do that by setting up conversion tracking in both Google Analytics and Google AdWords.

Once you set up conversion tracking you can finally see the results of your PPC ad campaigns and determine what’s working and what needs more work.

Now, it’s easier if you have a good developer around to make sure you set up conversion tracking correctly. Alternatively, if you’d like all the hassle taken out of PPC advertising, hire an expert.

Wrapping up

Conversion rate is one of the most important metrics that can help you to measure the success of your PPC campaign. It tells you what percentage of users clicking your ads is actually doing what you want them to do, whether that’s buying a product, signing up for a webinar or subscribing to your newsletter.

Now that you know what a conversion rate is, why it’s important and how to calculate yours, make sure to always pay attention to it whenever you’re running a PPC campaign.