Basics
Conversion
A conversion is a visitor completing the action a campaign was built to achieve, such as a purchase, a sign-up or a click on a paying ad.
A conversion is the moment a visitor does what the campaign wanted. For a shop it is a sale. For an insurer it might be a quote request. The share of visitors who convert is the conversion rate.
In search arbitrage there are two different conversions, and mixing them up causes confusion. For the arbitrageur, the conversion is the visitor clicking a search ad, because that is when money is earned. Buyers report this event back to the traffic platform with a postback or a Conversions API, ideally with its value, so the platform's algorithm learns to find more people like that visitor (value-based bidding).
For the advertiser who paid for that search ad, nothing has converted yet. Their conversion, the advertiser conversion, happens only if the visitor goes on to buy or enquire on the advertiser's own site.
The long-term health of the business rests on the second kind. If the arbitrageur's conversions rarely become advertiser conversions, engines lower the payout through smart pricing and advertisers exclude the placement.
An example
Say 1,000 visitors reach a page and 250 click a search ad. The arbitrageur counts 250 conversions. If 10 of those 250 go on to buy from advertisers, the advertisers count 10.
Related terms
Conversion rate (CVR)
Conversion rate is the percentage of visitors or clicks that go on to complete a desired action, such as a purchase, sign-up or enquiry.
Advertiser conversion
An advertiser conversion is the valuable action, such as a sale or lead, completed on the advertiser's own site after someone clicked their ad on a search feed.
Postback (server-to-server tracking)
A postback is a message sent directly from one company's server to another's to report that a tracked click produced a conversion or revenue.
Conversions API (CAPI)
The Conversions API is Meta's server-to-server interface for sending conversion events and their values to Meta directly, without relying on the visitor's browser.
Value-based bidding
Value-based bidding is automated bidding that aims for the highest total conversion value, not the highest number of conversions, using values the advertiser reports.
Funnel
A funnel is the sequence of steps a visitor passes through from first seeing an ad to the final action that earns money.