The conversion rate is the percentage of purchases of your services or products compared to the total number of people who visited your website through the adwords ad. It is of your best interest to keep this number as high as possible. If you have very low conversion rates you need to tweak your campaign and ad settings as soon as possible to get those numbers up. Refining your ads and choosing better keywords are the first step.

Google has set up a tool in your adwords account that allows you to do some exact conversion tracking for each campaign and each ad. This tool shows you exactly what your rates are and which ads are performing well so you can discard the poor performing ones. Look for patterns that can give you an idea of what might be going wrong in a certain campaign or ad so you can modify the poor performing ads.

The factors that determine adwords conversion are many. The first step is to get people clicking your ad and visit your site but the ultimate goal is to make people visit your site and buy your product or service or even generate a lead for a future sale. You are failing to convert when a visitor is not signing up for your newsletter or doesn't buy anything from you. Your site layout, design and information provided on it will largely influence your conversion rates. If your site is not user friendly your are very likely to loose a lot of customers due to poor conversion.

Don't offer free stuff in your ads if people visiting your site have to pay to get it. Your offer must reflect exactly what people will get when clicking the ad. An ugly site with poor navigation and difficult to use will not help you getting high conversion rates no matter how effective the ads are you created for your campaign.