What Does Cost Per Conversion Mean?
Cost per conversion (CPC or CPCon) 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. Cost per conversion 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.
Cost per conversion should not be confused with cost per click, which is also abbreviated CPC.
Techopedia Explains Cost Per Conversion
Cost per conversion is a metric used to identify how much it actually costs a Web advertiser to acquire each real customer – one that actually 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.
The formula for cost for conversion is simple: It is the total cost for generating the traffic divided by the number of conversions. For example, suppose that an ad campaign costs $100 for 100 views and at the end of the campaign, it yielded five conversions. In that case, the formula is CPC = $100/5 which results $20 per conversion.