Conversion rate (CVR)

Conversion rate is conversions divided by clicks (or visits). Ten sales from 500 clicks is a 2% conversion rate.

In search arbitrage two conversion rates matter and they belong to different parties. The arbitrageur's own rate is the share of bought visitors who complete the event chosen for optimisation, typically a feed ad click. In the standard example of 1,000 visits and 270 ad clicks it is 27%.

The more important rate is the advertiser's: of the clicks they paid for through the arbitrageur's page, how many became customers? The arbitrageur cannot see this number, yet it sets their income. Advertisers compare conversion rates across the sites their ads appear on. Where partner traffic converts at a similar rate to the search engine's own, bids hold. Where it converts far worse, the engine discounts the clicks (smart pricing) and advertisers exclude the site. Everything that brings real, interested people, such as honest ads and relevant keywords, lifts this hidden rate.

An example

Say an advertiser pays $2.00 a click and needs customers at $50 or less. That requires a 4% conversion rate ($2.00 / 0.04 = $50). If clicks from one partner site convert at 1%, a customer costs $200 and the advertiser will stop buying there.