# What is a conversion rate?

What is a conversion rate?

## The definition of conversion rate

A conversion rate records the percentage of users who have completed a desired action. Conversion rates are calculated by taking the total number of users who ‘convert’ (for example, by clicking on an advertisement), dividing it by the overall size of the audience and converting that figure into a percentage.

## How to calculate conversion rate?

Conversion rate can be calculated by taking the total number of users who have completed an action and dividing it by the overall size of the audience exposed to that ad, then multiplying that by 100. For example, an advertiser runs a campaign with an audience of 20,000 people. Out of that group, 800 people clicked on the ad (ie. converted). To calculate this example, divide 800 by 20,000 to get 0.04, or a 4% conversion rate.

## Why are conversion rates important?

Conversion rates are an effective way of comparing and contrasting the performance of multiple advertising channels. As with the example above, conversion rates are particularly important when running mobile user acquisition because they can measure the success of each campaign. They can also be used to set ROI expectations when scaling a campaign.

Conversion rates don’t always have to refer to clicks – they can also refer to conversion events further down the funnel. For example, it is possible to calculate the percentage of users who went on to install an app 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.

When used correctly, conversion rate analysis can reveal which channels are most effective for promoting a particular app, helping an advertiser to determine the effectiveness of their copy and use it to guide strategic decisions. If your data shows that a conversion rate is lower than expected, they can also be used to spot issues with an app’s UX (for example, when users are having problems signing in) and highlight other areas of improvement.

There isn’t a single conversion rate that can be used to define success across the mobile advertising industry, but research into industry benchmarks and vertical-specific conversion expectations can help. You can use this research to compare these figures with the performance of your in-house advertising campaigns across a selection of channels and advertisers.