In digital advertising, what does the term 'conversion rate' refer to?

The term 'conversion rate' specifically refers to the percentage of users who take a desired action after clicking on an ad. This desired action can vary depending on the goals of a campaign, including making a purchase, signing up for a newsletter, or downloading an app.

The conversion rate is a critical metric in digital advertising because it helps advertisers understand the effectiveness of their ads in driving user engagement and achieving business objectives. A high conversion rate indicates that the ad is successful in not only attracting clicks but also in motivating users to follow through with the intended action. Understanding and optimizing conversion rates is essential for improving return on investment (ROI) and ensuring that digital marketing strategies are aligned with overall business goals.

The other choices do not accurately describe conversion rate; they relate to different metrics within digital advertising. Impressions refer to the number of times an ad is displayed, while the cost of running an ad campaign pertains to the financial aspect rather than user actions. The total number of ads served reflects the volume of advertising delivered, not the effectiveness of those ads in converting users.