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CPM calculator

Cost per thousand [impressions](/brand/impression) or CPM (cost per mille) is a metric that defines the cost of one-thousand [impressions](/brand/impression) served: bought or sold.

Agencies, advertisers and marketers **buy** [impressions](/brand/impression), thus they would use CPM as a cost of the media they are buying; publishers or creators **sell** ad space to ad networks (e.g. Google Adsense), so they would use CPM to work out the amount of revenue they are generating per one-thousand [impressions](/brand/impression). This is called RPM (revenue per thousand).

CPMs are either static, i.e. agreed upon between the digital marketer and a publisher or network at a fixed cost, or variable (often referred to as eCPM) if buying in a real time auction process (programmatically).

As [impressions](/brand/impression) are usually served in their thousands or sometimes millions, the cost per one [impression](/brand/impression) is not worth understanding. Digital marketers have standardised this into a CPM or cost per thousand metric as it's a far easier number to understand and visualise.

CPM meaning

To calculate CPM, you will need the following metrics:

1. [Impressions delivered](/brand/impression)
2. Ad spend / budget / revenue

![CPM-formula-equation](/images/uploads/cpm-formula-cpm-equation.png)

CPM Formula

Buying media on different sites and platforms, across different creative sizes and using multiple data sources all impact the price you pay for one thousand [impressions](/brand/impression). These variables are why some CPMs are higher than others.

A higher CPM does not necessarily mean a bad one, and a low CPM does not always signal a great ad buy. When deciding how much you are willing to pay for the media, think back to the brief, the goal of the campaign and your brand’s positioning.

For example, if you are promoting a luxury brand that wants to be displayed in impactful formats, then paying higher CPMs of $15-20 makes sense. If you were the same brand and were buying at $2.50 CPM, then your brand’s communications may not be appearing in environments that reflect the brand’s premium positioning or be targeting the audience you wish to be reaching.

For [branding campaigns](/brand/), higher CPMs are usually paid for better quality, viewable, more on-target impressions, or using larger formats. For [performance campaigns](/performance), the lower the CPM combined with a lower CPA or higher conversion rate, are prioritised, as the goal is to drive the most efficient sales or conversions.

If you are running B2B campaigns, the target audience is typically much harder to reach, and thus more valuable to you as a buyer. This means you will usually pay far higher CPMs compared to B2C campaigns.

CPM in context

In programmatic campaigns (using a DSP or a self-serve platform such as Facebook's or LinkedIn's), the CPM of your media may be variable. This is referred to as eCPM (or the effective CPM).

As these ads will be bought in real-time, using a bidding model rather than agreeing with a publisher up-front on a fixed price, you will have to monitor the CPMs to ensure your campaign is not becoming inefficient.

A reason for an increase in CPM may be based on more competition coming into the market bidding for the same [impressions](/brand/impression). A classic example of this is around key holiday periods, such as Christmas. CPMs usually increase dramatically, even for exactly the same formats and targeting you were buying weeks before.

A buyer or trader may wish to manually increase the CPM to ensure they are winning enough bids for the [impressions](/brand/impression) they want. For example, if you wanted to increase the campaign's [viewability](/brand/viewability), you would have to increase your bid to ensure you are winning more bids for [impressions](/brand/impression) that are more likely to be served in-view. The same can be said for [performance campaigns](/performance), whereby you may want to pay more for additional data that may improve your conversion rate or lower your [CPA](/performance/CPA).

eCPM meaning

The buying metric you should use will be determined by the goal and objectives of your digital advertising campaign.

**CPM:** if you are running a [brand campaign](/brand), we would recommend using CPM as you will be able to be more targeted in the ads that are served and will know how much of your target audience you have reached.

**CPC:** should be used if you want a fixed number of users to click a link. This is typically used in performance campaigns if your goal is to increase site traffic. This means you only pay for the action you want the user to make.

CPM vs CPC

What is a CPM? CPM stands for Cost Per Mille

CPM calculator, CPM meaning and CPM formula

VTR calculator

Video View Through Rate or VTR is a video metric that measures how effective your video ad has been at influencing users to watch part or all of your video ad - or simply put, how effective it has been at recording a [video view](/brand/video-views). A VTR of 100% means every [impression](/brand/impression) served resulted in every user watching part or all of your video. We say "part or all" of a video because you as the marketer running the campaign must at first define what a [video view](/brand/video-views) is or understand what the vendor defines as a view.

We recommend measuring VTRs for different second lengths during your campaign. For example, for a 45” asset, you could record all 30” VTRs as your primary KPI, while also recording 100% completed view VTRs (often known as VCR - Video Completion Rate).

In reporting tools of an ad-server or DSP, you will often find [video views](/brand/video-views) being reporting in quartiles, e.g. 25%, 50%, 75% and 100% viewed. This is another way of displaying view-through rate, but instead of time-specific VTRs, they are quartile-specific. This can be used to analyze drop-offs, thus helping you inform the creative team how to improve future videos.

VTR is a key metric to use when running any video campaign, especially branding campaigns whereby you want as many users as possible to watch as much of your video. This will ensure your activity has had a chance to communicate the entire campaign message.

What is View Through Rate (VTR)?

To calculate view through rate, you will need the following metrics:

1. [Video views](/brand/video-views)

2.[Impressions delivered](/brand/impression)

![VTR-formula-equation](/images/uploads/vtr-formula-vtr-equation.png)

Ensure you understand what second-length the [video view](/brand/video-views) refers to. Is it [video view](/brand/video-views) of a full complete? Or it is only a 10” [video view](/brand/video-views). Once you understand this, the VTR that the formula calculates will be in relation to that second length.

VTR Formula

To help put the metric into context, it is imperative that you use VTR alongside CPV (cost per view) when judging a campaign’s success.

For example, compare the following two vendors:

**Vendor A delivers a 30” VTR of 5%, driving 1,000 views for a spend of $1,000.**

**Vendor B delivers a 30” VTR of 55%, driving 500 views for a spend of $1,000.**

If you analyze performance by just looking at VTR, you will mistakenly assume Vendor B is the most efficient, however, Vendor A has a lower CPV of $1 compared to Vendor B at $2. Having that said, if Vendor B is delivering the video to a more valuable audience or the ad is being served in a more premium environment, for example, it may be worth paying more for the view. Remember context is key when analyzing video campaign performance.

VTR in context

If you notice users are not watching until the end of your video, you may want to consider analysing where the drop-off is occurring in the video and inform the creative agency or those responsible for production. This kind of analysis can help inform creative teams what is working and what is not, highlighting any sections that may need editing to retain user attention.

An easy way to do this is by using the quartile VTR measurement. If you see a drop in users from 50% to 75% for example, you may want to see what is happening at that point in the video and suggest an edit to improve attention and completion rate.

Using VTR to inform creative

VTR is typically used to refer to the billable view point of the video or the minimum view point you are measuring the success of the campaign on. For example, if you are charged on a 30" view, and you are using 1' creative, then it is worth working out the 30" VTR.

VCR is the Video Completion Rate and is another way of writing 100% VTR. It is the percentage of impressions that resulted in a 100% completed view.

A lot vendors use VCR instead of VTR and in all honestly, it does not matter which name you use as soon as you are consistent in reporting. In Google jargon, they define VTR as the completed, non-skipped view (of 30”) divided by the number of [impressions](/brand/impression) served.

Difference between VTR and VCR - video completion rate

What is a video View Through Rate? We'll show you how to calculate VTR

View through rate - VTR calculator - VTR meaning

Average frequency calculator

Advertising frequency is the number of times an ad or [impression](/brand/impression) has been served, per unique user. Frequency is a key metric for [brand campaigns](/brand), especially when calculating to see how many times someone in your target audience has been exposed to an ad. We discuss the optimum frequency level for your objective and how you should set a frequency cap in the section below.

Frequency - alongside [reach](/brand/reach) - were the classic media metrics that were used to calculate delivery across offline channels such as television and print. While they were estimates, they were (and still are) commonly accepted and used to base judgments on how much budget should be used for certain media channels and vendors.

In the digital world, this has moved on substantially, especially as we are now able to report on very granular levels of delivery data. This however, comes with a caveat - it is becoming increasingly harder to accurately measure frequency as the number of devices the average person uses on a day-to-day basis has increased tenfold. With the proliferation of devices comes the challenge of accurately tracking exposure to a campaign (as it is hard to link a single user to multiple devices) when cross-device targeting has not been 100% solved.

The message here is that use the frequency metric in digital campaigns as a guide, rather than an absolute truth - if it looks high then you are most likely spamming users, annoying them and ultimately damaging your brand. If it is too low, are users being exposed enough to take on your campaign message?

What is frequency in marketing?

To calculate average frequency, you will need the following metrics:

1. [Impressions delivered](/brand/impression)
2. [Reach / unique users](/brand/reach)

![average-frequency-formula-equation](/images/uploads/marketing-frequency-formula-equation.png)

Average frequency formula

What is the perfect frequency? This is not a question that has an answer, but when thinking about the average frequency you wish your campaign to deliver, you will want to link it back to your campaign objectives and take into consideration how past campaign frequency numbers influenced sales or brand metrics. A low frequency will ensure that you are reaching a wider group of users, while a high frequency narrows your reach, but boosts the exposure your users will have to the campaign.

We recommend imposing a frequency cap every time you run a digital campaign, always basing it on your campaign objective. Frequency capping limits the number of times a user will be exposed to an ad over a period of time. This could be set at a lifetime level, a weekly level or even daily. Whichever you choose, always have the users' experience in mind. How often would you want to see an ad before it starts to annoy you?

Different targeting tactics will also influence your frequency cap. When re-targeting users who are warmer prospects, you will want to impose a higher frequency cap to nudge users to convert. If they are a cold prospect and they are not interested in the brand, you could be doing more harm than good if you continue to target them with a frequency too high.

For [branding campaigns](/brand), we would recommend a frequency cap of 3 ads per week. For [performance](/performance) campaigns, we would recommend the same frequency cap for prospecting, while increasing it for re-targeting strategies, ensuring that you exclude an audience who have finally converted. This way you will not annoy users who have already converted - an issue re-targeting advertisers tend to forget.

Frequency capping

DSPs and buying systems will let the media buyer decide how often they want their ads to be served to each user (frequency capping). On Facebook, there is an entire buying method called Facebook Reach and Frequency, which gives the buyer more control over campaign delivery. It is designed to serve ads to the maximum number of users as possible, within your target audience, in the Facebook ecosystem.

With reach and frequency buying, the buyer is able to control the minimum number of days before the same user is exposed to your ad again and how many times each person sees it, through capping the frequency.

Outside of reach and frequency buying, a user can only impose a Facebook frequency cap via auction buying using “reach” or “brand awareness” objectives. If you have [brand campaign](/brand) objectives, we recommend you stick to reach and frequency buying to ensure you know upfront exactly how many users you are likely to hit and at what frequency.

Facebook reach and frequency buying

What is frequency in marketing and advertising? How can you calculate the average frequency of a campaign?

Frequency in marketing, advertising frequency, and reach and frequency calculator

Impressions calculator

An impression in digital marketing and advertising is a count of every time your ad (paid or organic) is served to a user. The term impression is relevant for all types of digital marketing and advertising - from [Facebook video ads](/brand/video-views) to Google's [cost per click](/performance/CPC) text ads - it is simply the collective word used to say "the number of ads served”.

In a typical digital media campaign, the marketer will have an impression goal to work towards in order to deem it "delivered in full". This is why it is important to track how many impressions you have served during a campaign, ensuring that as an advertiser you are getting what you pay for.

What is an impression in marketing

To calculate impressions, you need the following metrics:

1. Ad spend / budget / revenue
2. [CPM (cost per thousand)](/brand/CPM)

![marketing-impressions-formula-equation](/images/uploads/impressions-formula-equation.png)

Impressions formula

When you browse a website or app that features advertising space or ad tags, the code will make a call to the publisher’s ad server asking which ad to serve to the user. The website will then display the selected ad to the user. This is how impressions are served in their simplest form.

An ad server will typically register and count an impression when the creative is downloaded on the user’s device and has started to load on the webpage; however, this may not be the case for all ad servers. If you are looking for an ad server to use, make sure they are using a strict methodology to ensure it only counts ads once the creative is rendered.

If there are multiple ad formats served at the same time to the user on one page, each formats’ impression count will increase by 1.

How is an impression requested, counted and displayed

This depends on your campaign goals and objectives. In [branding campaigns](/brand) when you do not need to direct a user to a landing page and the goal is to watch a video or view a banner ad, you should optimize towards a brand metric such as impression delivery, [reach](/brand/reach) or [VTR (view-through rate)](/brand/VTR) with video. In [branding campaigns](/brand), the fact that you reached your target delivery goal of users reached or impressions served is enough for it to be deemed a success.

For [performance or direct response campaigns](/performance), when you have a goal of pushing users to a landing page or driving a sale, you should optimize towards [clicks](/performance/click) or a [conversion](/performance/conversion) event; in this case, it does not matter how many impressions you served if the budget is being spent efficiently.

Impressions vs clicks - what should you optimise to?

There are a number of reasons why your impressions might not be delivering at the rate you were expecting.

In fixed [CPM](/brand/CPM) campaigns, the issue may revolve around a publisher overselling impressions, meaning there are not enough ad slots available for your brand to take within the campaign period. On the other side, it could be that the publisher site is experiencing a loss of traffic or a server outage that means fewer users could access the site at that time.

In variable [CPM](/brand/CPM) campaigns (eCPM), the reason may be a higher delivered [CPM](/brand/CPM) than expected, meaning while you are still spending the budget at an even pace, the impressions you are serving for the same budget are fewer than planned.

In both methods of buying impressions, you should always use a pacing tracker to ensure both budget and impressions are on track.

Impressions delivery issues

What is an impression in marketing and advertising? How to calculate how many impressions you will serve

Impressions in marketing and advertising

Average reach calculator

In advertising, media and marketing, reach is the number of unique users you have exposed your ad to. In digital marketing, this can refer to the number of unique users reached in a digital campaign, not the total number of [impressions ](/brand/impression)delivered.

Reach is usually accompanied by [frequency](/brand/frequency): while reach will tell you how many users you have hit, [frequency](/brand/frequency) tells you how many times that user was hit on average.

The metric was defined in media for television campaigns, whereby the TV planner/buyer would define a % reach of a target audience (e.g. 16-34 adults) at a specific [frequency](/brand/frequency). As digital media increases in stature and size, the terminology has been adapted and re-defined.

While within the digital sphere, reach and [frequency](/brand/frequency) is becoming easier to measure, there is still a lot to go in terms of de-duplicating reach across the walled gardens (e.g. Google, Amazon and Facebook) and across devices. This means while reach is becoming more accurate, it is not 100% possible yet to give a true representation of how many users have been exposed and reached during a campaign.

Reach is a metric that can be pulled in many reporting tools of ad servers and DSP platforms.

What is reach in media and marketing?

To calculate the average reach (please note this simply gives a top-line average view of how many users you have reached), you will need the following metrics:

1. [Impressions delivered](/brand/impression)
2. [Frequency](/brand/frequency)

![average-reach-formula-equation](/images/uploads/average-reach-formula-equation.png)

Average reach formula

Organic reach refers to the level or proportion of users you will reach if you post a social media post to your followers without any paid advertising support. The organic reach extends and increases the more the originally reached users engage and share the posts with their followers, thus the potential for organic reach is incredibly powerful if the content spreads. It is part of earned media for brands and publishers.

Organic reach on Facebook and other platforms used to be far higher than it is today. A publisher, user or brand could post an organic post and reach a large number of users without having to boost it with marketing spend. After changes in their algorithms, Facebook and other social platforms have now reduced this substantially and is now putting more pressure on publishers and brands to spend more on boosting the post rather than getting it for free (or earned media).

While its potential has declined over the years, posting organically still has its strengths. Here is a [great blog post from Hootsuite](https://blog.hootsuite.com/organic-reach-declining/) that summarises how to tackle decreasing organic reach on Facebook and other social media platforms.

Organic reach in Facebook and other social media platforms

We explain what reach is in marketing, show how to calculate the average reach and discuss the challenges of measurement

Reach in media, advertising and digital marketing

Video views calculator

Seems like a stupid question but you would be surprised at how the definition of a video view differs from vendor to vendor.

For example, Vendor A may consider a view to be the same as an [impression](/brand/impression), i.e. as soon as a video ad starts playing they count that as a view. Vendor B may consider a view to be 3” or more (which is the case for many social media platforms), while Vendor C only thinks a video should count as 30” or more as that is how they are charging their client.

To define a video view you must first define the minimum length of a video ad you want the user to watch for you to consider the campaign to be a success. Once you standardize your video view length (for example, it could be you want users to watch 30” of a 45” ad), you are then able to accurately compare and analyze different vendors, lines items or assets, to judge which is the most effective.

If you do not define the minimum length at the beginning, you will not be able to fairly judge the performance if you start comparing vendors who all use completely different definitions of a video view. Remember, each vendor is likely to use a unique methodology when defining video views so make sure you are aware of each before you start analyzing the performance and shifting budgets around. You may find you are misinterpreting the results and not spending your budget as effectively as you could be.

What is a video view?

To calculate video views, you need the following metrics:

1. [Impressions delivered](/brand/impression)
2. [VTR (view-through rate)](/brand/VTR)

![video-views-formula](/images/uploads/video-views-formula.png)

Ensure you understand what second-length the [VTR](/brand/VTR) refers to. Is it [VTR](/brand/VTR) of a full complete? Or it is only a 10” [VTR](/brand/VTR). Once you understand this, the video views that the formula calculates will be in relation to that second length.

Video view formula

Video ads come in many different shapes and sizes, but they can be narrowly defined to either “in-stream” or “out-stream”. Please note when we are talking about video ads, we are primarily referring to ads that are found on websites, on social channels and in apps. VOD (video on demand) can be included in this but they are unique to TV-related services. We would consider these ads in-stream.

![in-stream-video-ad](/images/uploads/instream-video-ad.png)

**In-stream** ads are ads that are served within a website’s or app’s existing video player. A classic example of this would be YouTube Trueview’s skippable ads, which are housed within YouTube’s video player. Within in-stream, the primary ad format is “pre-roll”, which is served before the content the user has selected to watch. Ads that play in the middle of content are called “mid-roll” and ads served at the end (far less available) are called “post-roll”. Not all in-stream ads are skippable, so publishers must make the judgment if forcing a user to watch a long ad before content is affecting user experience.

![out-stream-video-ad](/images/uploads/outstream-video-ad.png)

**Out-stream** ads are ads that are served outside of a website's or app’s video player. An example of this is a video ad that appears between the text of a news article. This has allowed publishers to monetize more parts of their site or app - not just the video content that sits in video players. The positive of this format is that users can simply scroll past or close it if they are not interested, but this means [view-through rates (VTR)](/brand/VTR) and video completion rates (VCR) are generally a lot lower than in-stream ads, especially the non-skippable kind.

Types of video ad formats



As mentioned earlier, each vendor (in particular social media platforms) will have their own definitions for what they constitute as a video view. Not all are equal, so do not assume that a video view is equal to 30” - it may well be 3” or less if you are taking numbers from Facebook.

Here are some of the most commonly used vendors' definitions of a view:

* **YouTube Trueview (skippable):** 30 seconds or to the end of the video (whichever is shorter)
* **Facebook:** 3 seconds or more
* **Instagram video:** 3 seconds or more
* **Instagram story:** upon opening
* **Snapchat story:** upon opening
* **Twitter:** 3 seconds or more

Vendor definitions of video views

What is a digital advertising video view? And why can no one agree on the standard length of one?

Video views

Viewability calculator

Viewability in digital advertising and marketing is the percentage (%) of the total number of [impressions](/brand/impression) served that were "in-view" to the user. The definition of "in-view" is a hotly debated subject, but the current most widely adopted standard is from the MRC (Media Ratings Council) and is as follows:

* **Display ads (i.e. banners):** 50% of the ad (pixels) has to be served above the fold for greater than or equal to 1 second, post-ad render
* **Video ads:** 50% of the ad (pixels) has to be served above the fold for greater than or equal to 2 consecutive seconds, post-ad render

[More information about the MRC standards can be found here](http://www.mediaratingcouncil.org/063014%20Viewable%20Ad%20Impression%20Guideline_Final.pdf).

[And more information about the IAB's guidelines can be found here](https://www.iab.com/guidelines/iab-measurement-guidelines/).

Viewability was introduced to allow advertisers and agencies to measure how much of the display and [video impressions](/brand/video-views) they were buying were actually being served and had the chance to be seen. Before, you had to trust that a publisher would serve [impressions](/brand/impression) above the fold. This was a key issue when programmatic buying methods were first introduced, as often the inventory available was remnant, i.e. low quality, below-the-fold [impressions](/brand/impression) the direct advertisers were not buying.

Nowadays, viewability is a key metric that programmatic traders and buyers focus on when managing campaigns. All major DSPs will report on it, alongside third-party ad verification vendors such as Integral Ad Science, MOAT, or DoubleVerify.

What is viewability in digital advertising?

To calculate viewability, you need the following metrics:

1. [Impressions](/brand/impression) served in-view (taken from your ad verification provider or DSP)

2. Total [impressions served](/brand/impression)

![marketing-viewability-formula-equation](/images/uploads/viewability.png)

Viewability formula

This is a tricky question as ultimately it depends on what your campaign goals are. If it is brand-focused, and you want to reach your target audience (not necessarily wanting them to [click](/performance/click)) and catch their attention, then you want to optimize your programmatic bidding toward high in-view placements. 60% - 70% viewability should be a minimum.

If your goal is more [performance](/performance)-based, if you want a user to [convert](/performance/conversion) or visit your website, then you should not worry as much about viewability compared to [branding campaigns](/brand). This is because it is very hard to optimize towards both [performance](/performance) AND viewability. As a [performance](/performance) advertiser, you can afford to bid and win lower viewability [impressions](/brand/impression) if the [impressions](/brand/impression) that you are winning are driving business results.

Despite seeming counter-intuitive, having a high overall viewability, serving ads that are more likely to be served above the fold in key positions of a website, may not drive [performance](/performance) goals (i.e. [conversions](/performance/conversion) or [clicks](/performance/click/)). You must find the right balance between a strong viewability level and [performance](/performance) goals (CPA, CPC, etc.).

What is a good viewability rate? What are the benchmarks?

Remember, low viewability (i.e. 50%) may not be a bad thing if the 50% of the ads served in view are driving strong performance in regards to your KPI. However, if viewability is one of your main objectives, then there are a number of reasons why it could be so low.

If you are running a programmatic display or video campaign, you may simply be bidding too low a CPM in your DSP. The lower the bid, the more likely you will win the less desirable inventory, which is often found below the fold on publishers’ websites.

You also may be bidding and optimizing towards another objective so for your bid, the DSP is prioritizing other metrics over viewability.

Furthermore, you should review how long it takes for your ad to load. If it is heavy and uses rich media (video and other heavy animation), then the ad might not be loading in time for your verification solution to register the ad in-view. Look to using simpler ads, switch to HTML5 creative as standard and optimize the creative so that it has a smaller file size. Non-IAB standard formats sometimes have trouble recording viewability correctly so always check with your verification supplier for any troubleshooting.

We recommend reviewing the "time in-view” metric (Integral Ad Science offers this: <https://integralads.com/capabilities/time-in-view/>) to see how long your ads were actually in-view on the page. This is crucial for video campaigns - how do you know if your video ad is always playing in-view?

Why do I have a low viewability?

The main way of improving your campaign viewability will be by optimizing (increasing) bids to the sitelists, inventory and supply sources, audiences and ad formats that are driving the strongest rate. This has to be done in relation to the maximum bid you planned the campaign at as increasing the bid to get perfect 100% viewability will increase your [CPM](/brand/CPM) to levels far higher than you originally planned for.

Other ways involve buying impressions on a vCPM (viewable cost per 1000 impressions). You will pay a premium, but every [impression](/brand/impression) measured out-of-view by your third-party supplier will not be billed to you. This means you will only pay for in-view [impressions](/brand/impression).

If you are buying video [impressions](/brand/impression), we recommend you also pay a premium for video formats that pause out of view. If not, the video will likely play even if the users scrolls past it.

How do I improve the viewability of my campaign?

What is viewability in digital advertising? How do you calculate it? What are the current standards adopted across the industry?

Viewability in media, advertising and digital marketing

CPA calculator

Cost per acquisition (CPA) in digital marketing is the aggregate measure of how much it costs to drive one [conversion](/performance/conversion/). It is used when analyzing campaign results as it lets the marketer understand which digital channel, vendor or ad is driving the most cost-efficient performance. While conversion rate is useful to understand what has been effective at converting your audience, the CPA provides the understanding of cost-efficiency.

An example is if you have spent $100 on PPC ads that have driven 5 [conversions](/performance/conversion/), your CPA would be $20. Once you work out the CPA across vendors, targeting and which ads are performing the strongest, you can then, at a very granular level, optimize your campaign spend to ensure you are getting the most efficient performance out of the budget spent.

When you combine CPA with understanding the CLV (customer lifetime value) of each [conversion](/performance/conversion/), you have a powerful set of metrics, which can be used to confidently optimize your marketing spend as effectively and efficiently as possible.

CPA is often referred to as cost per action - both terms meaning the same thing.

The CPA meaning can also refer to a buying model of only paying the vendor for when an action or acquisition has occurred. We discuss this in a later section of this article.

What is a cost per acquisition?

To calculate cost per acquisition, you will need the following metrics:

1. Budget / ad spend
2. [Conversions](/performance/conversion/)

![CPA-formula-equation-cost-per-acquisition](/images/uploads/cpa-formula-cost-per-acquisition-equation.png)

Cost per acquisition formula

If you were to reduce the budget on high CPA vendors, ads and targeting methods, and upweight the more efficient performers, then your campaign CPA will decrease.

Within paid channels, especially biddable channels, to improve CPA you should aim to improve your quality score (Google Adwords) and improve the relevance score (Facebook) to lower your [CPMs](/brand/CPM/) and [CPCs](/performance/CPC/). By lowering your bids, you may not see that large of a drop-off, meaning there could be efficiencies to be found.

A re-targeting strategy can also be far more efficient than prospecting. By tagging up your site and app at all stages of the funnel, you will be able to re-target on a granular level and reach higher intent users who have shown interest but not converted and target lookalike audiences of those who share similarities with previous convertors. These strategies will nearly always produce lower CPAs than prospecting lesser intent audiences.

Eventually there will be a limit to how much the paid media can be improved, which means you will have to consider improving the landing page experience (conversion rate optimization on the website), adding more enticing pricing or offers, adding sale periods or improving the creative messaging and copy.

How to improve and decrease CPA

The majority of [impressions](/brand/impression/) are bought on a [CPM](/brand/CPM/) or [CPC](/performance/CPC/) basis. Another method of buying [impressions](/brand/impression/) is on a CPA basis, which means you only pay for when the [impressions](/brand/impression/) drive a [conversion](/performance/conversion/). The benefit of this method is that you know exactly how much you are paying for one [conversion ](/performance/conversion/)and can therefore understand the efficiency of the channel or vendor you are using from the beginning.

This is common in affiliate networks, whereby websites will advertise a product or service of another company’s and will earn a commission % off the value of the [conversion](/performance/conversion/).

The downside of this is that some of the inventory and websites that your brand will be appearing on may not be as brand safe or premium as others. This means if you wish to shift brand perception, this method of buying is not advised. A CPA buy is far more relevant for [performance or direct response](/performance/) campaigns whereby you are purely focused on generating [conversions](/performance/conversion/).

Buying impressions and inventory on a CPA basis

We explain what a CPA is in digital marketing and how to calculate it

Cost per click (CPC) calculator

Cost per click or CPC is a metric that defines how much it has cost you to drive a single [click](/performance/click/). This is used mostly in pay per click (PPC) advertising campaigns whereby you only pay when a user [clicks](/performance/click/) on your ad; you will not pay if the [impression](/brand/impression/) was served but was not clicked on - giving you the added bonus of additional [impressions](/brand/impression/) that may increase awareness for zero cost.

Regardless if you are buying on a CPC model, you are able to monitor the CPC for all marketing channels, vendors and ads if you have access to the spend and number of [clicks](/performance/click/) generated. Combined with the data from your analytics platform (e.g. Google Analytics), you will be able to understand the type and quality of traffic you are driving from your marketing efforts. You may have the most efficient CPC from one vendor but if the bounce rate is high or your target audience is not converting, then it could be worth increasing your CPC bids that may in turn lead to lower [CPAs (cost per acquisition)](/performance/CPA/).

If your KPI (key performance indicator) is to drive traffic to a particular URL or landing page, and you are testing multiple copy variants or creatives, CPC is a great metric to judge effectiveness.

Please note, for [branding](/brand/) campaigns when your KPI is not performance-driven, CPC is a redundant metric because in many campaigns it is irrelevant if a user [clicks](/performance/click/) on an ad or not. Simply getting the ad or message in front of an eyeball is enough to increase awareness of the brand.

What is the definition of CPC?

To calculate cost per click (CPC), you will need the following metrics:

1. Budget / ad spend
2. [Clicks](/performance/click/)

![CPC-formula-equation-cost-per-click](/images/uploads/cpc-formula-equation-cost-per-click.png)

Cost per click (CPC) formula

Cost per click in Google Adwords (the primary platform for running PPC campaigns online) is the main buying method. When running a PPC campaign, you will only be charged when someone [clicks](/performance/click/) on your ad.

The price per [click](/performance/click/) varies considerably and is affected by the following:

* Your maximum CPC bid
* Competition
* Ad rank
* Quality score (the rating Google gives your ads based on how relevant your ad is to what the user is searching for and how relevant the landing page is to the ad copy)

So what is a good CPC? There is no right answer for this, but you must judge it based on your industry average and how much you are willing to pay to drive [conversions](/performance/conversion/) and high-quality traffic. A company with a high-value product or service (e.g. B2B) will accept a far higher CPC than an FMCG brand for example.

Generic keywords will also require far higher CPCs than brand terms. This is because when a user searches for a generic term (e.g. car parts) they do not know which brand they are looking for. If you can appear with a high ad rank (paying a premium CPC) you are more likely to influence a user to buy from you.

With a combination of brand and generic terms, you should implement a CPC strategy whereby you are diversifying your CPCs - bidding higher for generic and more valuable terms and bidding lower for branded terms to defend your name and site traffic against competitors.

How is CPC calculated in PPC and Adwords?

Lowering CPC is no easy feat and you want to ensure you are not lowering it for the sake of it and are causing negative effects on your conversion rate or [CPA](/performance/CPA/). CPC networks - in particular Google Adwords and Bing - want the ads to be as relevant as possible to the user, to ensure people do not get fed up with ads and block them.

You are rewarded with a higher quality score the more relevant the ad copy and landing pages are to your keyword. If you increase your quality score, you will ultimately have lower CPCs.

To improve your quality score you must do the following:

* Improve the relevance of your ad copy to the keywords you are bidding on
* Increase [CTR (click through rate)](/performance/CTR/CTR-formula-CTR-calculator.html) by using more compelling ad copy
* Improve the quality of your ad and landing page, to ensure the landing page a user arrives on is completely relevant as well as easy to use for their desired search intent

How to lower CPC in PPC and Adwords

What is CPC and how to calculate it?

Cost per click (CPC) definition and calculator

CTR calculator

Click through rate or CTR is a ratio of the number of [clicks](/performance/click/) driven compared to [impressions](/brand/impression/) served, in a digital advertising campaign. In other words, it is the ratio of clicks to impressions. We show how to calculate it using the CTR formula in the next section.

CTR is the key metric to use to determine how successful your ad has been at driving a [click](/performance/click/) in comparison to the number of [impressions](/brand/impression/) it took to deliver that [click](/performance/click/). A high CTR means your ad is very effective in influencing a large proportion of users served with an [impression](/brand/impression/) to [click](/performance/click/). If your KPI (key performance indicator) is to drive people to a particular URL or landing page, then CTR is the ideal metric to judge effectiveness.

Please note, for [branding campaigns](/brand/) when your KPI is not [performance](/performance/)-driven, CTR is a redundant metric. Marketers and advertisers should stop thinking in terms of CTR as the sole measure of success because in many campaigns it is irrelevant if a user clicks on an ad or not. Simply getting the ad or message in front of an eyeball is enough to increase awareness of the brand.

What is a Click Through Rate (CTR) and what is its use in digital marketing?

To calculate Click Through Rate (CTR), you will need the following metrics to be used with the CTR formula:

1. [Clicks](/performance/click/)
2. [Impressions](/brand/impression/)

![CTR-click-through-rate-formula](/images/uploads/ctr-formula-ctr-equation.png)

Click Through Rate CTR formula

Click through rates must be judged in the context of which digital channel you are using, and which formats you are running. Inherently, channels such as PPC will have far higher CTRs as users are actively looking to click on a search result.

While CTR is a good indicator of how effective your ad has been at driving a response, judging a campaign purely on click through rates can be dangerous. For example, compare the following two vendors:

**Digital display vendor X delivers a CTR of 0.10%, with a CPC of $0.80**

**Paid social vendor Y delivers a CTR of 1%, with a CPC of $2.50**

If we had split the budget equally, we would see that we are in fact driving more clicks with digital display vendor X than paid social vendor Y, due to the lower CPC, despite having a far lower CTR. On the other hand, if digital display’s traffic is far more likely to bounce compared to paid social this may be a consideration if you are after a quality audience rather than any traffic. This highlights the fact that everything you evaluate must be linked back to the main objective of the campaign.

When evaluating a traffic campaign's success, we recommend you take into account CTR, [CPC](/performance/CPC/), bounce rate, and session/dwell time. This will give you a more holistic view of how effective your ad has been at not just driving the most efficient traffic, but on the quality of traffic as well.

What is a good Click Through Rate (CTR)?

CTRs vary depending on what type of digital ad it is, as well as how strong the call to action is, but in general PPC ads (1-5%) will generate the highest CTR, followed by larger rich media display (1-3%), social ads (0.20-0.80%) and finally standard IAB display banners (0.05-0.10%).

Average Click Through Rate (CTR) across paid digital channels

There are a number of ways to improve the CTR of your campaign or ad. We will focus on some of the key actions you can make to increase the percentage of impressions that result in users clicking on your ad.

**Ad copy or creative:** this involves editing the copy (text) or changing the imagery or design of your ad so that it either appeals more to your audience, it is more eye-catching or it is more persuasive at encouraging a user to click. We recommend you A/B test multiple ad copy or design variations in order to work out which is the most effective. Including a clear call-to-action will go a long way.

**Buying method or optimization setup:** this might be an obvious one, but in most DSPs or buying platforms these days, you can set up your campaign so that the DSP will automatically bid for inventory or users who will most likely click on your ad. In Facebook Business Manager, this involves setting your campaign objective to "Traffic". These campaigns will drive low CPCs and higher CTRs than if they were set to deliver against a low CPM or against another non-related metric.

**Increase your bid:** paying more may pay off in the long-run if you are able to find the efficiency sweet spot of driving more clicks while only paying a little bit more per thousand impressions or per click.

How do I improve my ad's Click Through Rate (CTR)?

What is CTR? What is the CTR formula? What is a good CTR and how can you improve it in order to boost traffic?

CTR formula and CTR calculator

Ad click calculator

An ad click is when a user clicks/taps on part of a digital advertisement, be it the image/creative or a text URL. In most cases, once clicked, the browser or app will take the user away from the page they are on to another site - typically the advertiser or the campaign landing page.

Once clicked, the page will communicate with the adserver that is tracking the activity and record one click against the ad placement.

If the campaign KPI is clicks or [CTR](/performance/CTR/CTR-formula-CTR-calculator.html), you should factor in the quality of traffic you are driving by using site analytics tools to determine the session length and bounce rate, just in case you are driving a lot of accidental clicks.

If you are judging the success via [conversions](/performance/conversion/) or sales, you should not just focus on the number of clicks that are being driven by each vendor and ad, but the conversion rate and [CPA](/performance/CPA/) to ensure you are making the most efficient use of your budget. When judging a sales campaign by the number of clicks rather than [conversions](/performance/conversion/) driven, you may be incorrectly attributing success to the wrong vendor or ad.

If it is a rich media display ad, the ad may feature interactive elements,  such as navigation buttons or video controls, for example. Clicks within these units are not technically counted as a click - as they do not click out to a different URL - but counted as an engagement.

What is an ad click? 

To estimate the number of clicks you will drive in a campaign, you will need the following metrics:

1. [Estimated impressions delivered](/brand/impression/)

2. [Estimated CTR (click through rate)](/performance/CTR/CTR-formula-CTR-calculator.html)

![clicks-formula-equation](/images/uploads/clicks-formula-equation.png)

Ad click formula

First of all, you need to decide what the objective of your campaign is. If it is to drive traffic, then please continue to read the tips below! If it is to drive sales, you should consider not optimizing your campaign to clicks but when possible to [conversions](/performance/conversion/) instead and target lookalike audiences of users who are converting to more efficiently expand your [reach](/brand/reach/).

**Set your buying or optimizations objectives to clicks or [CTR](/performance/CTR/CTR-formula-CTR-calculator.html):** make sure the DSP or platform you are using to buy ads is set up to bid on inventory that will more likely generate a click, rather than a “[reach](/brand/reach/)” objective that will simply find the lowest cost [impressions](/brand/impression/) available per unique user.

**Include a call to action (CTA):** if your ad does not clearly communicate to the user (of whom you have a second of attention from, at best) to click to find out more, then you are hampering your chances of generating clicks. The CTA could be in your creative or imagery, or simply refining your ad copy to be clearer. However you do it, do have the user experience in mind.

**Test different vendors, ad formats and digital channels:** if static image ads are not working for you, for example, then try a video ad to grab attention. Continually measure results, be it in terms of a [CPC](/performance/CPC/) or [CPA](/performance/CPA/) to judge efficiency. When you have tested different formats within platforms, move onto another platform (e.g. Facebook to Twitter) or test different digital channels (such as PPC or email) to discover the most effective and efficient delivery for driving clicks.

At the end of the day, there is no magic formula that will help you increase clicks. As long as you continually test different methods as described above, you will learn what is working best for your campaigns.

Keep the objective in mind and measure everything in terms of cost-efficiency, conversion rate and conversions and your marketing spend will only go further.

How to increase clicks

Ad click definition and calculator

What is a click in digital advertising?

Impressions or clicks

In digital marketing, a conversion is an event that is tracked and recorded when a campaign goal or interaction is complete. In a lot of cases, this will mean a sale.

For example, if a user [clicks](/performance/click/) on a PPC search ad and buys a t-shirt from landing on the advertiser page, that would count as a sales conversion. A conversion is tracked via a conversion pixel (Javascript code that fires when a conversion event has been triggered), which tells the ad server that a conversion has occurred. This conversion will then be attributed to the ad that influenced the conversion.

Other conversion types could include [clicks](/performance/click/) on a URL, a landing page visit, a newsletter sign-up, a white paper or brochure download, or a telephone call via a number that is linked to the digital campaign. Any trackable action or event that the marketer can add a conversion pixel to can count as a conversion.

In analytics systems (e.g. Google Analytics), these are often referred to as “events” or "goals", rather than conversions.

What is a conversion in digital marketing?

To estimate the number of conversions, you will need the following metrics:

1. [Impressions](/brand/impression/) or [clicks](/performance/click/) delivered

2. Conversion rate

![ad-conversion-formula-equation](/images/uploads/conversion-formula-equation.png)

Conversion formula

The primary reason for tracking conversions is to understand the efficacy of your campaign. For example, if you run an e-commerce website and do not know which of your ads are driving sales, you could be potentially making poor use of your budget. Once conversion tracking is set up, you will be able to understand which tactic or strategy is driving the most efficient or highest value conversions. As you test and learn, you will be able to confidently shift budget to better performing areas to make the most effective use of your marketing spend.

Alongside conversions, it is important to measure the conversion rate (of [impressions](/brand/impression/) or [clicks](/performance/click/) to conversions) and the [cost per acquisition (CPA)](/performance/CPA/) to fully understand how hard your activity is working.

You should set up and track conversions in a way that reflects your marketing funnel. Once you have your funnel fully tracked, you will be able to understand where people are dropping off as they are pushed down the funnel, as well as creating lookalike audiences from high-value converters.

Why is it important to track conversions?

There are two types of conversions that are typically tracked in ad servers: click-through and view-through conversions, also referred to as post-click or post-view conversions.

* **Click-through conversions (or post-click)** are conversions that were driven from a user [clicking](/performance/click/) on your ad and converting then or at a later date (within your defined conversion window).
* **View-through conversions (or post-view)** are conversions that were driven from a user being served your ad, not [clicking](/performance/click/) on it, and then converting then or at a later date (within your defined conversion window). This type of conversion was borne from the need to attribute ads (such as digital display banners, that generate fewer amounts of [clicks](/performance/click/) compared to other digital channels) that were seen and may have influenced the sale at a later date. Even if the user saw the ad but did not [click](/performance/click/), he or she could be subconsciously influenced to convert at a later date.

If view-through conversions are ignored, you could not be giving enough credit to the digital channels or formats that are influencing a conversion. Both types must be tracked and considered when evaluating the results of a campaign.

Click-through and View-through Conversions

A conversion window is set up to define the number of days or time that the [impression's](/brand/impression/) influence will be valid for to count towards influencing a conversion. For both types of conversions (click and view), users often do not convert at the time of being served the ad. This means we need to define a window of influence that we feel is enough time for the user to still be influenced by it before converting.

If this window is too long, we may be giving too much credit to the ad if a user converts, for example, 30 days in the future, when in reality the influence of the ad might have worn off by then. For the inverse, we may be under-attributing the effect of the ad.

When defining a conversion window, you should take into consideration the purchase cycle of the product or service. A more expensive product will likely need a longer attribution window as people take longer to research and consider than a lower-cost item before converting.

Conversion window

Conversion attribution falls into either single-touch or multi-touch. Single-touch only looks at one ad [impression](/brand/impression/) while multi-touch takes into account multiple channels and ads.

Instead of looking at single conversions in isolation, setting up multi-touch conversion attribution will help you understand the path to conversion and which touchpoints the user was exposed to throughout the journey. In the real world, the user will be exposed to many ads before finally converting; conversion attribution modelling will alleviate these shortfalls.

In multi-touch attribution, giving different weightings to each touchpoint allows you to attribute the conversion across multiple touchpoints rather than the one that the user saw last before converting.

The most commonly used single-touch and multi-touch conversion attribution models are as follows:

* **Last click:** the last ad that the user [clicked](/performance/click/) on will be attributed the conversion, despite potentially being served multiple ads beforehand that are now not given any credit
* **First click:** the first ad that the user [clicked](/performance/click/) on will be attributed the conversion, regardless of any ad that was served afterwards
* **Multi-touch:** the act of giving multiple touchpoints credit throughout the purchase journey:

  * **Linear:** each touch-point is given an equal proportion of the attribution
  * **Time decay:** the touchpoint that was closest to conversion will receive a higher share of the attribution
  * **Cross-device:** using probabilistic or deterministic modelling, you would track the number of devices and ads a user was exposed to before converting