So you've got your AdWords campaign up and running, and your ads and keywords are starting to generate an impressive number of clicks. Great! But unless you've got conversion tracking installed, you won't be able to see how many of those clicks are actually resulting in sales.
Conversion tracking is a powerful tool in AdWords that lets you identify how well your ad campaign is generating leads, sales, downloads, sign-ups, and other key actions for your business. The data recorded by conversion tracking allows you to identify which areas of your campaign are working and not working, so you can optimize your bids, ad text, and keywords accordingly.
Depending on your business, a conversion could be counted when a customer makes a purchase through your website, signs up for a newsletter, fills out an online survey or contact form, downloads an app or whitepaper, calls a phone number from a mobile phone, and so on. After you've identified what customer actions you want to track as conversions , it takes just a few simple and free steps to get conversion tracking up and running for your campaign.
RELATED: What Is a Good Conversion Rate? 
AdWords Conversion Tracking: The Basic Setup
Setting up conversion tracking involves generating a bit of HTML code in AdWords that you paste into the webpage on your site that customers visit immediately after completing the conversion (such as an "Order Confirmation" or "Thanks for Your Email" page).
To get started, click on the Tools and Analysis tab in AdWords , and select Conversions from the drop-down menu, which brings up the All conversions page. Click on the Conversions tab, then click the +Conversion button to create your first conversion.
You'll be prompted to fill out a form that will help AdWords generate the appropriate HTML code for you to paste into your webpage.
Give the conversion a name, such as "Contact Form submissions" if you want to track how many times visitors fill out your site's Contact Us form.
Next, select the source of the conversion. Your choices are:
1) Webpage. (If you want customers to complete an action on your webpage, such as an online purchase, contact form submission, or page visit.)
2) Call on-site. (If you want customers to call the phone number on your site from a mobile device.)
3) App download. (If you want customers to download your app .)
Here's a more detailed walkthrough of each of the three conversion sources:
1) Webpage Conversions
Choose the most accurate conversion category from the drop-down menu: Purchase/Sale, Signup, Lead, View of a key page (i.e. the Contact Us page), or Other. (Click image to enlarge.)
Select the Markup language. HTML is the standard choice, but check with your web developer if one of the other alternatives (CHTML, XHTML, WML) would be more appropriate – especially if you're running a mobile site.
Next, enter a value for the conversion. You can assign an amount manually, such as 10 if you're selling e-books for $10 each. If you're selling a lot of different products, you can also set up the conversion tracker to record shopping cart values that change dynamically on the site. (This feature is explained in more detail in the Advanced section below.)
Enabling the tracking indicator causes an unobtrusive message to appear on your site letting visitors know that their visits to your site are being tracked by Google. Displaying it is optional, and you can opt out of showing the message by selecting the "Don't add a notification to the code generated for my page" option. If you do select it (by default, the selection is "yes") you can replace the standard message with your own, and customize the message's appearance by changing the size (single line of text vs. two lines), page background color, and language.
On the next page, you'll receive an HTML code that you'll need to paste into the page on your site that you want to track the conversion for, such as the "Thanks for Visiting" page. If someone else is responsible for making changes to your website, you can email them the code along with personalized instructions.
2) Call On-Site Conversions
If your website allows customers to call your business phone number directly from their smartphones, you can use conversion tracking to track the number of times a call is made. Go through similar steps above to generate your code, and then you'll have to manually insert "onclick" HTML tags  into the code provided by Google.
An onclick tag for a simple text phone number looks like this:
Replace the phone number with your company's phone number, and the Call Now text with whatever text you'd like to use.
Onclick tags can also be used with buttons (again, replace the sample phone numbers with your own):
And when your Call Now link is a custom GIF image (replaced "call_now_button.gif" with the name of your gif file, and replace the example phone numbers with your own):
3) App Conversions
AdWords is able to track downloads of Android app through the Google Play store, and, to a limited degree, iOS apps through the Apple App Store. (Click to enlarge.)
NOTE: iOS app tracking is not available for Google Search or Google Display Network campaigns -- only for the ads that are served in mobile apps through the Display Network.
To set up conversion tracking for an Android app, you will be asked for the app's "Package Name." To find it, go to the app's page in the Google Play store. Copy the URL. The package number is the information after the details?id= string, and before the &feature= string. For example, the text highlighted in yellow in the example URL below is the Package Name:
Cut and paste that text into the Package Name box. To test that it's working correctly, click on the "View in Android Market" link, and you should link through to the app's page on Google Play. If you get an error or page not found, you've entered it wrong.
There is no further code to copy or paste for this one. Android app conversions should start tracking in about 24 hours.
Analyzing Your AdWords Conversion Data
You can see information about your conversions from the Campaigns tab at the ad group, ads, and keywords levels. Click the Columns tab, then Conversions, to customize which columns appear. (Click image to enlarge.)
Some of the basic columns include:
Conv. (1-per-click): Counts each time you receive one or more conversions from a single ad-click. You can use this number to approximate the number of new customers you're getting.
Cost / conv. (1-per-click): Displays your cost (how much you spent on clicks) divided by your total conversions. This helps you measure your return on investment (ROI). Ideally, you should be spending less on clicks than you're earning on conversions.
Conv. rate (1-per-click): Shows the percentage of clicks that resulted in conversions. The higher the percentage, the more effectively the ads or keywords are performing.
View-through conv.: Measures the number of times a customer viewed, but did not click on, your ad and later went through with a conversion.
AdWords Conversion Tracking: Advanced Options
Tracking Conversions from website shopping cart
Tracking purchases whose values you don't set yourself manually involves taking the basic tracking code provided by AdWords and modifying it with additional code unique to your particular e-commerce platform, such as eBay or PayPal. Each site does things a little differently, so it's best to read specific help files for your e-commerce site. It's best not to attempt this unless you have a working knowledge of web programming and HTML.
When this is set up properly, any conversion value statistic, such as total conversion value and cost per click , will reflect the actual revenue of the products you've sold, as opposed to a static value.
Advanced Conversion Settings: View-Through Conversions & Search De-Duplication
Available through the Advanced Settings when you're setting up Website or Call On-Site conversions, the View-through conversion window option tracks when a person sees your ad but doesn't click it, then visits your site at a later time and completes a conversion – in other words, they might have been influenced by your ad to return and convert at a later time. You can set this to track for a specific amount of time in between the view and the conversion, from 1 to 30 days, or a custom amount.
Enabling Search de-duplication means that a single conversion won't be counted twice, both as a view-through conversion and a click-through conversion if, for example, a customer first sees a Display Network ad then clicks on a text ad before making the conversion. When this is enabled, the conversion will only be counted as a click-through conversion.
Setting Up the Conversion Optimizer
By default, your ad rotation  setting is set to optimize for clicks, meaning that AdWords will serve the ads it feels are most likely to result in a click-through. If you're tracking conversions, you can change this setting to optimize for conversions, meaning that the ads deemed most likely to result in conversions will be served in the auction  more frequently.
To change the setting, go to the Settings tab and scroll down to the Advanced settings section. Open the Ad delivery: Ad rotation, frequency capping drop-down menu, click Optimize for conversions, and click Save.
Back in the Conversions tab, you can click Settings and then Edit Settings to change the conversion bid metric, which tells the Conversion Optimizer whether to focus on 1-per-click conversions or many-per-click conversions.
Analyzing Conversion Data with Search Funnels
Once conversion tracking has been up and running for a couple of weeks, you can use the Search Funnels analytics to track detailed data about your conversions such as how much time elapsed between when customers clicked on your ad for the first time to when they completed the conversion, and how many times they saw your ad before converting.
Access Search Funnels by clicking Tools and Analysis, then Conversions, then clicking the Search Funnels link at the lower left of the Conversions window.
Analyzing this data can help you gain insights about how customers behave on your website, such as how much time elapsed between when they clicked on your ad for the first time to when they completed the conversion, and how many times they saw your ads before converting. (Click to enlarge.)
AdWords Conversion Tracking Troubleshooting
Conversion columns aren't showing any data
It can take up to 24 hours for conversion data to start appearing in AdWords. If after 24 hours conversions still aren't showing up, it's possible that no customers have converted yet. One way to test this is by going through the motions of a conversion yourself by clicking on your ad when it appears, and doing whatever action is required to trigger the conversion on your site. If after another 24 hours your conversion isn't registering, double-check that the HTML code was installed correctly. You might have to install additional plug-ins or move the code to a different part of the page.
Data Isn't 100% Accurate
If customers don't have cookies enabled in their browser when they click on your ad and complete the conversion, Conversion Tracking won't work. Most people browse the web with cookies turned on, but if you choose to display the Tracking Indicator link on your website, visitors can opt out of conversion tracking by disabling the conversion tracker cookie.
NOTE: If you change any of a conversion's settings in AdWords, this alters its code and you'll have to paste the new code into the webpage.
Campaign Receives Many Clicks, But Few Conversions
Campaigns receiving many clicks and few conversions might represent a weak return on investment  (ROI) if the ads cost more to run than the business is earning back through conversions. Examining Search Funnels data and reviewing ad text and keywords might help you understand why customers are failing to convert once they reach your website.
Is the landing page  unappealing? Does the website make it difficult for customers to navigate through to the conversion page? Do the ads and keywords set up expectations about a product that the website does not deliver (for example, do your ads appear when a customer searches for "cheap handbags" but take them to a website that sells expensive designer handbags?). Try to put yourself in the customer's shoes to figure out why customers who click on your ads aren't going all the way.
Got more questions about AdWords conversion tracking? Leave them in the comments!
This is a guest post by Erin Bell, an SEM and SEO copywriter with Performics Canada, the Search division of ZenithOptimedia (Publicis Groupe). Erin has been writing about consumer technology and interactive entertainment for the past decade, and her articles have been featured on Globetechnology.com, PC World Canada, Mac World Canada, Microsoft Home Magazine, Gamezebo.com, CommonSenseMedia.org, Graphite.org, and others.