What it means
A conversion campaign tells the ad platform: 'I will pay for clicks, but please find me the people most likely to complete this specific action.' The platform uses its machine-learning stack to identify users who match the behaviour profile of past converters, and prioritises showing your ads to them.
The conversion event has to be tracked back to the ad platform via pixel, Conversions API, or Lower Funnel Events. Without that signal, the algorithm has nothing to optimise against and falls back to clicks (which is rarely what you actually want).
Why it matters
Most ad accounts run conversion campaigns once they have enough conversion volume (Meta wants around 50 conversions in seven days for the algorithm to optimise meaningfully). Below that, the algorithm under-optimises, so newer accounts often run traffic or engagement campaigns first to build conversion volume, then switch.
The trap: defining the wrong conversion event. If you pick 'form submitted' as the conversion, the algorithm finds form-fillers (often low intent). If you pick 'qualified lead' as the conversion, it finds people who actually convert.
Example
A car detailing studio starts on traffic campaigns at SGD 30 a day. After a month of building conversion volume, they switch to a conversion campaign optimised against 'qualified lead' (defined as a CTWA conversation that booked an appointment). Cost per qualified lead drops from SGD 28 to SGD 14 over the next four weeks as Meta's algorithm learns.