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# How to Calculate CPM, CPC, CPA, CR, eCPM, eCPC, eCPA, and ROI. At present, there are several advertising models and formulas. This article aims at providing the most important ad revenue formulas which can be used as your little hand guide for revenue calculations.

Publishers are always in pursuit to find the ways to generate more revenue. While there are many, a major source of revenue for website owners or bloggers will be from the ads.

At present, there are several advertising models and formulas. We aim to provide the most important ad revenue formulas which could be used as your little hand guide for revenue calculations.

## CPM – Cost Per Mille/Cost Per Thousand

CPM is the most common online advertising model and as the name suggests (Mille is Latin word for thousand), CPM model compensates the publishers for every 1000 views (impressions) an advertisement receives. We’ve seen the CPMs go as much as \$50 for some publishers

Unlike CPC, where you’ll be paid for the clicks you generated, advertisers will pay you for each impression you deliver. CPM is calculated by dividing the total cost to the advertiser by the number of impressions received on the ad and multiplying the result with 1000.

### CPM Formula

Numerically,

CPM = (Cost to the Advertiser / No. of Impressions) x 1000

In another way,

Cost to the Advertiser = CPM x (Impressions/1000)

Example: Suppose an advertiser agrees to pay US \$ 50 for certain ad campaign and the ad receives 50000 impressions. Then the cost per 1000 impression will come out to be (50/50000) x 1000 = US \$1.

Thus the CPM that the advertiser agrees is \$1.

## CPC – Cost Per Click

CPC is another advertising model that is used extensively. According to this model, the advertiser compensates the publishers whenever an ad is clicked. This means that no matter how many times the ads are viewed, the advertiser will only pay the publishers for the number of times it is clicked. Google AdSense supports CPC (but there are many alternatives too) and pays you based on clicks.

CPC is calculated by dividing the cost to the advertiser by the number of clicks received on the ad.

### CPC Formula

Numerically,

CPC= Cost to the Advertiser / Number of Clicks

Or

The cost to the advertiser = CPC x Number of clicks received

Example: Let’s say you are running an advertisement campaign under the CPC model. You receive 100 clicks on the ad and the CPC is US \$3. Then the total cost that you will receive from the advertiser will be 3 x 100 = US \$300.00 ## CR- Conversion Rate

CR is an important term that you may need to consider during an ad campaign. It means the ratio of the number of positive conversions to the total number of clicks received on the ad. The positive conversion may be a situation that profits the company for which the ad was created like the product’s sale or subscription.

Why does a publisher need to know CR of a campaign?

It’s simple. If a specific website of yours has higher CRs, then you can switch to CPA/CPL pricing model on that website. This, in turn, boosts your revenue. Of course, there are others ways to double your ad revenue.

### CR Formula

Numerically,

CR= (Number of positive conversions/ Number of clicks received) x 100

Example: If the total number of conversions is 25 out of 1000 ad clicks, the CR = 2.5%.

## CPA – Cost Per Action/Acquisition

This is another ad model that compensates the publisher for any positive customer action like the sale of the product or sign in of newsletter etc.

CPA can be found out by dividing the cost to the advertiser with the number of actions received on the ad.

### CPA Formula

CPA = Cost to the Advertiser / Number of Conversions.

It can also be computed by dividing the cost to the advertiser by the product of Number of impressions, Click through rate and Conversion rate.

Thus,

CPA = Cost to an advertiser / (Number of ad impressions x CTR x CR)

Example: Suppose a certain ad campaign was viewed 5000 times, received 200 clicks and there were total 20 positive conversions. The total cost that the advertiser decides to pay is \$200, Then the CPA can be calculated as:

CTR = (200/5000) x 100 = 4% 0r 0.04.

No. of positive conversions = 20

So, CR = (20/200) x 100 = 10% or 0.10

Total cost to the advertiser = \$200

Thus,

CPA = 200/20 = US \$ 10

0r, CPA = 200/ (5000 x 0.04 x 0.10) = US \$10

Also read: CPM vs CPC vs CPA vs CPI vs CPL

## eCPM- Effective Cost per Mille

eCPM tells you the performance of your ads. It is found by dividing the total earning from an ad by the total number of impressions and multiplying the result by 1000.

### eCPM Formula

eCPM = (Total earning from an ad / Total impressions) x 1000

Example: Let’s say that a company earns US \$100 by an ad campaign and the total number of Impressions that the ad received is 10000. Then,

the eCPM = (100 / 10000) x 1000 = US \$ 10

Company gets an earning of US \$10 for every 1000 ad impressions.

### Why should you calculate eCPM?

eCPM is a great metric to help the publishers in calculating and optimizing their ad campaign as it allows publishers to directly compare ad revenues across various platforms. ## eCPC – Effective Cost Per Click

eCPC is a similar concept to that of eCPM with a difference that it takes into account the number of clicks received by the ad rather than 1000 ad impressions. Hence, eCPC calculates the earning made from an ad for every click that it gets.

### eCPC Formula

eCPC = Total Earning from an ad / Total number of clicks received

## eCPA – Effective Cost Per Action

Similar to eCPM and eCPC, eCPA calculates the effectiveness of CPA ad model. It is determined by dividing the total earnings generated by an ad campaign by the total number of actions taken on that ad.

### eCPA Formula

eCPA = Total Earning from an ad / Total number of actions taken

## ROI- Return on Investment

ROI is a crucial term in the field of digital marketing. To know about the success of an ad campaign, it is necessary to analyze the overall profit gained out of it. ROI is calculated by subtracting the total campaign cost from the total ad revenue earned and dividing it by the total campaign cost. Sometimes, marketers refer to it as ROAS (Return On Ad Spend).

### ROI Formula

ROI = (Total ad Revenue – Total ad campaign cost) / Total ad campaign cost

Example: Suppose a company spent US \$500 on an ad campaign and earned a return of \$1500 as the revenue. Then, the ROI = (1500 – 500) / 500 = 2. This is equal to 200% of the cost. Or in other words, for every 1 \$ spent on the campaign, the company earned 2\$ in return.

So, You got what are you here for?  Great. Now, we have a weekly email to help you stay smart and on-the-trend by delivering essential insights. Feel free to read first. At Automatad, we help publishers to monetize better without hampering the user experience. Our products are live across hundreds of publishers, earning them incremental ad revenue with every passing second. You can request a free audit to get an estimated revenue uplift today.

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• October 2, 2018 at 7:52 am
Fairchild

Hi there,

Thanks for your great post, but I have 2 questions:

1. “CPA = Cost to an advertiser / (Number of ad impressions x CTR x CR)
Example: Suppose a certain ad campaign was viewed 5000 times, received 200 clicks and there were total 20 positive conversions. The total cost that the advertiser decides to pay is \$200,”

how do I get “the advertiser decides to pay is \$200”? Is it given or there is a calculation to get the figure?

2. How can I get “Total ad Revenue”? Is it given or there is a calculation to get the figure?

Thank you

• October 3, 2018 at 7:10 am

Hey,

1. The total cost advertiser decides to pay can be pre-negotiated by you. The \$200 in this post was taken as an example. In most cases, you’ll be given a CPA value directly before starting the campaign.

2. Total Ad Revenue calculation will vary based on the pricing model.

Note: Anyways, you’ll have access to a dashboard to see the updated revenue in all the monetization products. For instance, Automatad’s dashboard will have a separate revenue dashboard to help you track your earnings.

• 