Conversion Cost

What is Conversion Cost?

Conversion Cost (CC) is a term used in Web analytics and online advertising to refer to the total cost paid for an advertisement, in relation to the success in achieving the goal of that advertisement. CC is the ratio of the number of advertisement views and the number of successful conversions (purchases, signups, participation or whatever the objective of the advertisement is) resulting from those ad views.

A CC should not be confused with cost per click, which is also abbreviated CPC.

CC is a metric used to identify how much it really costs a Web advertiser to acquire each real customer, the one that makes a purchase. The cost includes all the traffic for the duration of a campaign, during which conversions are also tracked. To make CPC calculation easier, advertising companies usually provide “traffic packages,” where the one paying for advertisements gets a specific number of views or a specific time span for a fixed amount of money

The formula for the CC is very simple: It is the total cost for generating the traffic divided by the number of conversions. For example, suppose that an ad campaign costs $1000 for 1000 views and at the end of the campaign, it yielded fifty conversions. In that case, the formula is CPC = $1000/50 which results in $20 per conversion.