Advertising metrics explained
CPM vs CPC vs CTR
Understand CPM, CPC, and CTR, how the formulas connect, and which AdProfitTools calculator to use for each advertising metric.
The short version
CPM
Cost per 1,000 impressions. Use it when you care about reach, display inventory, or media buying cost.
CPM = cost / impressions x 1000 CPC
Cost per click. Use it when traffic cost is the decision metric or when comparing paid channels.
CPC = cost / clicks CTR
Click-through rate. Use it to understand how often impressions turn into clicks.
CTR = clicks / impressions x 100 How the formulas connect
CPM, CPC, and CTR are not isolated metrics. If you know the cost of impressions and the rate at which those impressions become clicks, you can estimate the implied cost per click.
Example: a $12 CPM with a 1.5% CTR implies an $0.80 CPC. That does not tell you profit yet, but it tells you whether impression-priced media is likely to compete with click-priced media.
Which calculator should you use?
- Use the CPM calculator when the inputs are ad spend and impressions.
- Use the CPC calculator when the inputs are ad spend and clicks, or when converting CPM plus CTR into CPC.
- Use the CTR calculator when the inputs are clicks and impressions.
- Use a ROAS calculator when campaign revenue is known.