Comparing Conversion Rates
This rather odd term refers to the number of site visitors who make a purchase, that is, are "converted" from window-shoppers into customers. If your site receives 100,000 visitors per month, and generates 1,000 sales per month, then you have a (very commendable) conversion rate of 1%.
The main things that influence the conversion rate are of course the product and the site. If you have a crummy or over-priced product, then your conversion rate will always be low. Even with the best product in the world, however, if your site is weak, or isn't designed to sell, you'll suffer from a low conversion rate. See my WDVL article, They're lookin' but they ain't buyin' for tips on how to design your site to sell.
In fact, low conversion rates are one of the most commonly-heard complaints about marketing on the Web. On the face of it, this would seem to have nothing to do with banner ads. After all, a banner can lead a horse to your site, but if he won't drink once he's there, the fault would seem to lie with the site designers. In fact, however, a banner ad campaign often has an indirect influence on a site's conversion rate.
Banner ads attract prospective customers, but some prospects are hotter than others. A given banner on a given site may attract a high proportion of people who are seriously interested in a product, while another one attracts mostly window-shoppers. Both the banner and the site on which the banner appears may influence this. Banners that use "clever" stratagems to induce people to click (for example, by simulating an error message, or by offering a free goodie) tend to attract idle gawkers. Banners that provide facts about the product being advertised tend to attract more likely buyers. As for the site the banner appears on, it's generally believed that the better the targeting, the higher the quality of the clickthroughs.
While this all sounds very logical, in the real world it's almost impossible to measure conversion rate for individual banners, at least in a large campaign. Crunching the numbers is just too much work. Conversion rate is something that it's wise to keep in mind, but it may not be as useful for fine-tuning as other stats.
The various measures of effectiveness that we've discussed are of limited use by themselves. To really put them to work, try comparing them to figures for other sites and for the industry as a whole. We'll find out how to do this in the next section.
