I bet making calculations will never stop leaving you alone! Advertising and Marketing field is not an exception here. You are completely wrong if you think marketing industry is not using basic-to-advanced calculations, formulas and some metrics to get right insights about costs and profits involved.
If you hate using mathematics when you were student in High school, you will find yourself obliged again using it! Worry not, in the following article I am hoping to simplify all so you can save some time and energy.
In this post, I will demonstrate with explanations some of the most used terms, calculations or formulas in the Online Internet Marketing industry.
Let’s get started.
Calculations & Formulas In Internet Marketing :
1- How to Calculate CPM?
The term CPM –also called CPI (Cost per Impression)– is widely used metric that means Cost per Mille (1000). The ”M” is used here to indicate the Roman numeral for 1,000. CPM model is using the impression as the main metric.
CPM bidding model means the advertiser is willing to pay (say for example: publishers, website owners or administrator, Adwords) based on the number of accumulated impression (how many times your ad shown–NOT clicked).
How to Calculate CPM:
This is how to calculate CPM :
CPM= Advertisement cost × 1.000 ÷ Impressions
2- How to Calculate CPC?
CPC stands for Cost per Click which means how much are you willing to pay per each actual click . As opposed to pay per impressions, advertisers here are paying — for example publishers, Google or Bing — an amount of money when their ads being actually clicked by online users.
This model is well-known, widely adopted and more effective than CPM.
How To Calculate CPC:
This is how to calculate your CPC:
CPC= Cost ÷ Number of clicks
3- How to Calculate CTR?
CTR stands for Click Through Rate ;and it is an essential ingredient when deciding on measuring the effectiveness of your online campaigns, ads, or keywords. CTR metrics is used almost in every advertising platform like Facebook, Google, Bing etc. Major analytics and Advertising reports include CTR metrics.
How To Calculate CTR:
Follow this formula if you are interested to calculate CTR:
CTR= Number of Clicks ÷ Number of Impressions × 100
4- How To Calculate CR?
In the paid advertising, CR or conversion rate is considered a very important metric . Indeed, conversion rate is a key element advertising KPI when you define what is a conversion meant to your business ( Sign-ups, leads, email newsletter, a call to your business, purchase etc)
How to Calculate CR:
Here is the basic formula to count conversion rate or CR:
CR= Total number of conversions ÷ Total number of clicks × 100
5- How To Calculate CPA?
CPA stands for Cost Per Acquisition or Cost Per Action. Also, it means Cost Per Lead (CPL). This model relies on maximizing acquisitions, rather than relying on impressions or clicks.
Here is the simple formula when you intend to calculate your CPA
CPA= Cost (campaign, ad-group, or keyword) ÷ Conversions or CPA= CPC ÷ Conversions rate
Of course, there are other formulas that popping up in the world of Internet Marketing. However, the most used ones in how to calculate rates or metrics are mentioned above. If you think something in Internet calculation is so important that is not listed here, please feel free to state on the Comment Section Below. I hope this post helps in shedding light on most used calculations & formulas in Internet Marketing.