e-commerce E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...

, the conversion funnel is the journey a consumer takes through an Internet advertising or search system, navigating an e-commerce website, and finally making a purchase. The consumer is seen as being "converted" from a visitor to the site to a buyer. A funnel describes the progressive reduction in the number of users at each stage of the process. Advertising efforts can be aimed at "upper funnel", "middle funnel", or "lower funnel" potential customers.Jansen, B. J. and Schuster, S. (2011
Bidding on the Buying Funnel for Sponsored Search Campaigns
Journal of Electronic Commerce Research. 12(1), 1-18. Typically a large number of customers search for a product/service or register as page view on a referring page which is linked to the e-commerce site by a

banner ad A web banner or banner ad is a Online Advertising, form of advertising on the World Wide Web delivered by an ad server. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract web traffic, tra ...

, ad network or conventional link. Only a small proportion of those seeing the advertisement or link actually click the link. The metric used to describe this ratio is the click-through rate (CTR) and represents the top level of the funnel. Typical banner and advertising click-through rates are 0.02% in late 2010 and have decreased over the past three years. Click-through rates are highly sensitive to small changes such as link text, link size, link position and many others and these effects interact cumulatively. The process of understanding which creative material brings the highest click-through rate is known as ad optimization. Once the link is clicked and the visitor to the referring page enters the e-commerce site itself, only a small proportion of visitors typically proceed to the product pages, creating further constriction of the metaphorical funnel. Each step the visitor takes further reduces the number of visitors, typically by 30%–80% per page. Adding the product to the shopping cart, registering or filling in contact details and payment all further reduce the numbers step-by-step cumulatively along the funnel. The more steps, the fewer visitors get through to becoming paying customers. For this reason, sites with similar pricing and products can have hugely different

conversion rate In electronic commerce, conversion marketing is a marketing technique aimed at increasing ''conversions''—that is, turning site visitors into paying customers. Conversion marketing addresses low online conversion rates by improving overall cu ...

s of visitors to customers and therefore greatly differing profits.

References

{{reflist Web analytics

See also

References