Formulas
The three metrics are linked: CPM = CPC × CTR × 10. If you know two, the third is determined. That's why ad platforms typically display all three regardless of how the campaign was bid.
Worked example
You ran a $500 ad campaign that generated 100,000 impressions and 2,000 clicks.
- CPM = $500 ÷ 100,000 × 1,000 = $5.00
- CPC = $500 ÷ 2,000 = $0.25
- CTR = 2,000 ÷ 100,000 × 100% = 2.00%
If a competing channel offers $4 CPM with a 1% CTR, the effective CPC is $4 ÷ 10 = $0.40 — your $0.25 CPC channel is cheaper despite the higher CPM.
FAQ
Which metric should I optimise for?
It depends on the goal. For brand awareness, CPM keeps reach affordable. For traffic and direct response, CPC tells you what each visit costs. For unit economics, neither is enough — pair with conversion rate to compute true cost per acquisition.
What's a "good" CTR?
Search ads regularly hit 3–8%. Display banners typically run 0.05–0.5%. Social ads sit between, often 0.5–2%. Compare against your historical baseline rather than industry averages.
Does this work for video or impressions-only buys?
For video, treat completed views as "clicks" and total views as "impressions" — you'll get cost per completed view (CPCV) instead of CPC. For pure CPM buys, just leave Clicks at 0 and CPC will be unavailable.