What is CTR, CPC, CPA, CPM?
There is a lot of C in Digital Marketing like Click-through rate, Cost per click, Cost per acquisition, cost per mile. Today we are going to see What is CTR, CPC, CPA, CPM?
1. Click-Through Rate (CTR):
Click-Through Rate is the number of times an ad is clicked compared to the number of visitors viewing the Ads.
For Example, If 1000 people view your ads and 100 people show interest and click that ad then your CTR will be 10%.
Here is Click Through Rate Formula,
CTR = (Click/Impression) x 100
CTR is important to your success because CTR is directly affected too your Quality Score. If your Quality Score is good then you will get a good ranking position on the search result page.
CTR helps to understand your target audience, If your Click-through rate is low then it indicates you are targeting the wrong audience
Example:- If you are running a Campaign for School Admission on Google Ads then your target audience will be Children, Parents, but you are targeting college students. (Why do College students show interest in this ad? They already completed their school) This ad is not useful for college students. it means you’re targeting the wrong audience so, they will just skip this ad. and its effect on your Quality Score.
2. Cost Per Click (CPC):
When it comes to online advertising, there are so many factors that go into the performance of your campaign, from the creative to the keywords to the landing page and more.
One of these factors is cost-per-click (CPC). While you might have heard it mentioned before, you may not know exactly what it means or how it affects your marketing strategy. Read on to learn all about this important metric and how you can use it to make the most of your ad spend budget!
Cost per click (CPC) refers to the actual price paid to every single click.
The formula of Cost per click,
CPC = (Total Cost/Number Of Clicks)
Cost per click refers to when we are running a paid campaign for any product. when people click on that ad then only google/Facebook will charge you. If they don’t click on that ad then they do not charge.
3. Cost Per Acquisition (CPA):
In business, it’s important to measure how much you spend in order to get something in return. Cost per acquisition (CPA) is one of the most popular ways of measuring your return on investment (ROI).
This method divides the total cost of an advertisement by the number of customers that buy something as a result of it. CPA marketing involves advertising products or services to new customers and paying a set amount every time they purchase something.
Cost Per Acquisition is the cost of every time a conversion happens for the advertiser.
The formula of CPA,
Cost Per Acquisition = (Total Advertising Cost/Total number of Conversion)
Cost per acquisition (CPA) is the cost of getting each new customer through your sales funnel, and it’s one of the most important metrics you can track as you optimize your marketing campaigns
If you run any campaign on Google/Facebook (or any other platform) for selling your product or services. Your Ad budget will be $1500 and you get 50 Conversions then your CPA will be $30.
The Cost per acquisition used for:
- Social Media
- Content Marketing
4. Cost Per Thousand/Mille (CPM):
In online marketing, the cost per thousand impressions (CPM) is the cost per 1,000 impressions of an advertisement. It can be calculated by dividing the total amount spent on advertising by the number of people who saw it.
Cost per impression (CPM) is one of the metrics aimed at demonstrating the effectiveness of online marketing campaigns. The lower the CPM rates, the more effective and optimized the marketing campaign is.
Let’s see the formula of Cost per Thousand (CPM),
Cost per Thousand= (Total Number Of Ads Spend/ Number of Impression) X 1000
CPM stands for Cost per Thousand impressions—a unit of measurement used to calculate the cost of placing an advertisement on TV, radio, or online.