What is conversion tracking & why should you care about it?

Ecommerce brands are facing a performance crisis.

Ad costs are rising, targeting is getting broader, and privacy regulations are making measurement harder than ever.

And yet, the single most critical lever for delivering paid media performance and profitability is often neglected and misunderstood. We’re talking about conversion tracking, and today we’re breaking down exactly what it is, and why it matters more than ever.

What is conversion tracking?

Conversion tracking is the process of monitoring and recording customer interactions on your website, then sending that data back to your advertising, analytics and CRM platforms. Think of it as the bridge between what happens on your site and the algorithms that power your paid marketing.

More specifically, conversion tracking is:

• A system for capturing and sending event, product and customer data from your website to ads, email and analytics platforms.

• A data pipeline that powers attribution, targeting, bidding and optimisation in ad platforms

• The mechanism that tells platforms which ads to serve based on real user intent

These interactions (known as events) capture the key milestones in a shopper’s journey - from Page View, to Add to Cart, to Purchase - and form the foundation of performance marketing intelligence. When stitched together, they provide a clear map of the customer journey: what people are buying, how they got there, and where they drop off.

This “signal data”, when enriched with product and customer information, is fed into platforms like Meta and Google, and their algorithms depend on this data to:

• Understand user intent

• Guide prospecting and build retargeting audiences

• Decide which creative to deliver and which placement to show it on

• Optimise bids toward the highest-converting audiences

All of this is only possible if your tracking data is accurate, complete and compliant. Most of the time, it isn’t.

How it works

We won’t get too technical here, but this is essentially how conversion tracking works in practice:

1. A customer visits your website

2. If they arrive via an ad or email, a click ID (such as fbclid, gclid, ttclid) is attached to the session

3. As the user takes an action (e.g., add to cart or purchase), an event fires

4. A payload is generated - this is the structured bundle of data sent with the event, typically including:

   • Event name/Event ID

   • Product details (ID, price, variant, category)

   • Customer identifiers (email/phone hashed, click IDs, IP, geo)

   • Page URL, timestamp and consent status

5. This payload is sent to the relevant platform, which uses the click ID and customer data to tie the conversion back to the source (the ad clicked on and the person clicking).

6. The platform then:

   • Attributes the conversion

   • Updates audience lists

   • Trains the bidding algorithm (e.g. Meta Advantage+, Google Smart Bidding)

   • Learns which audiences, creatives and placements generate the best results

This process fuels everything from retargeting to algorithmic real-time optimisation of targeting. The richer the data, the smarter the algorithms become — and the faster your campaigns learn.

Why you should care about conversion tracking

Conversion tracking is the foundation of performance marketing. If it’s broken, the consequences are immediate and serious.

• Fewer attributed conversions and intent-based bidding signals

• Wasted ad spend as algorithms are starved of data or optimise against inaccurate signals

• Misattribution (under or over-reporting)

• Smaller retargeting pools

• Compromised analytics data and impacted decision-making

• Slower campaign learning, higher CPAs, lower ROAS

When tracking fails, it directly affects algorithmic optimisation and campaign performance, and undermines strategic, creative and budget allocation decisions.

With accurate tracking in place, algorithms learn faster, match better, and direct spend toward the people most likely to purchase.

If your signals are weak, your results will be too.

The takeaway

We’re in a privacy-first era where attribution visibility is shrinking, third-party data is disappearing, and platforms have more control than ever over how your ads are targeted and delivered. Algorithms now make the majority of optimisation decisions - but those decisions are only as good as the tracking signals they receive.

Campaign structure and creative still matter, but without high-quality event, product and customer data feeding Meta, Google and other platforms, even the smartest setups and best-performing ads will be outperformed by brands with stronger signal data.

Tracking is the primary driver of paid media performance - not targeting hacks, not manual bidding, not audience tricks. The algorithms run the show, and the data you send them determines how well they perform.

Yet most brands underinvest in tracking. They rely on free plugins, default pixels and cookie-cutter apps they can’t see, control or validate - and those blind spots quietly drain performance every single day.

Tracking is targeting.

Tracking is performance.

Tracking is profit.

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This blog is based on the episode The performance crisis NO ONE is talking about from the Leaf Colectivo podcast with CEO Gilbert and CCO Wesley. Listen now.