Work out the key paid-ads metrics from your campaign numbers: cost per click (CPC), cost per thousand impressions (CPM), cost per acquisition (CPA), click-through rate and conversion rate.
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The formulas
- CPC = ad spend ÷ clicks
- CPM = ad spend ÷ impressions × 1,000
- CPA = ad spend ÷ conversions
- CTR = clicks ÷ impressions × 100
- Conversion rate = conversions ÷ clicks × 100
Worked example
A campaign spends £1,000, gets 80,000 impressions, 1,600 clicks and 48 sales. That’s a CPC of £0.63, a CPM of £12.50, a CTR of 2%, a conversion rate of 3% and a CPA of £20.83.
If the average order makes £30 profit before ad costs, each sale costs £20.83 to win and leaves about £9 of profit. If the CPA rises above £30, the campaign loses money on the first sale.
What to improve first
- High CPM: your audience is expensive or competitive. Try broader targeting or different placements.
- Low CTR: the ad isn’t grabbing attention. Test new images, hooks and headlines.
- Low conversion rate: the landing page or offer is the problem, not the ad.
Frequently asked questions
What is a good CPC?
It varies hugely by industry and platform, from a few pence in some consumer niches to over £10 in legal or finance search ads. Compare against your own past campaigns and your profit per sale.
What's the difference between CPA and CAC?
CPA is the ad cost per conversion in a campaign. Customer acquisition cost (CAC) includes all sales and marketing costs to win a customer.
Is CPM or CPC better?
Neither is better by itself. What matters is the cost of a result, usually CPA, compared with what a customer is worth.
Does it work in other currencies?
Yes. The calculations are the same in any currency.
Sources
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